Helping a $16M Media Company Pick Its Buyer

0:01Unternehmer/Gast Hey Alex, how are you? Craig Sewing here, CEO, creator, founder of The American Dream TV. We produce national TV shows that are on real estate, lifestyle, and culture. So, think about it as um you know, we've seen seen shows like Million Dollar Listing, Flip or Flop, Chip and Joanna. We're the opposite of that. We're real content, real professionals. So, the way you'd look at it is we're a B2B model first before we're a B2C show with real estate professionals. So, we create content in the medium of TV shows, and then we we purpose that in social.

0:30So, we're uh 16 million gross revenue, 4 million EBITDA. The question, what is stopping us from where I'd like to double our EBITDA? Honestly, the I know the answer, there's nothing. Uh there's things that we're doing that are going to improve that. Right. So, better a little bit better churn. We need to advance a little bit more of a robust product set. Integrate AI, we're starting to do that. My question for you is, we are in the path of acquisition. I have an investment banker, we're about a week in.

0:58And uh we're not >> We're in the process. >> You want to sell? Okay. We're moving. >> And um I guess my question for you is how do you determine your your dance partner? Like uh one of your guys, Justin outside, said, you know, uh do you have key man risk? And I like, yeah, kind of, but I think it's key man reward. Like, I still got fight in me. I want to slay more dragons. So, we have offers that we can look at for, right? It's a good twist. Uh but we have different paths we can go. We're a media company.

1:26There's a real estate potential buyer. There's the portals like your Zillow's. And then of course PE, which is of interest. So, how do you going down this path for the first time really, uh kind of decide where you want to go? >> Um so, I I I work through people, product, deal. So, who are the people I'm dealing with? If I don't like them, nothing else matters. >> Okay. Yeah.

1:52>> Right? If I like them, then I move on to product, which is like, what what basically are we aligned on the vision? Like what this will be as a product in the future? Do I Do I want to run towards that? Does that feel heavy? Does that feel light? Right? And then the third thing is okay, if I like the people and I like where we're going, I like the destination, I like the company. Uh do I like the economics? And that's pretty much how I thought through it.

2:18>> Yeah. The money for us is secondary. I bought my partners out, so I own 100% of the company. The company's worth quite a bit. >> Yeah. >> So for me it's more about the strategic alignment, a cultural alignment. But uh we have we have paths, so it's it's an exciting moment for us, but you know, I'm I'm pretending as if nothing's going to happen. >> You should. Because you have no idea what could happen. Yeah. >> So it's really hard to imagine, you know, when you do something that started on a napkin and got to this level. Yeah.

2:44So that's where we are. >> I get it. It's it's uh I think we have to have I can't remember the math, but it's it's like one in 10,000 businesses sell to an institutional buyer. So the statistics are not on anyone's side. And so a lot more people start processes than finish processes, and a lot of processes are uh underwhelming. I'll put it that way. Once you get into due diligence, they start beating you up on terms and all these other things.

3:12Um and so if you are Let me ask you a different question. Why do you want to sell? >> Same thing your guy asked me. And and quite frankly, it's not an easy one to answer. You know, I think for most entrepreneurs, it's kind of a a dream, you know, to >> to leave or do you want to stay on? >> I want to stay on. You know, it's That's why I don't think it's a key man risk. >> Because you own the whole company now, right? >> Right. >> Okay. So you're making $4 million a >> I'm going to have to stay on anyway. And there's I don't think there's anybody who's going to buy us and just say, "Oh, ship has sailed." Because I am involved with obviously strategy, sales, things like that. But I also don't want to leave. I'm 46. Still got a lot of fight in me. So I'm not really eager to leave.

3:51>> Any reason that you're even doing it to begin with? >> Well, again, I think that any entrepreneur's dream is to to sell their company. I bought my partners out and it gets a little lonely. And we're we're very much a David story, you know, we we came from nothing. So, the idea of joining a Goliath and having a bigger partnership, I mean, just one of many examples I could give like Zillow, for example. >> soul-crushing.

4:16Alex All right? I'm just because you join a Goliath, but you also feel the weight of Goliath, which is all of the bureaucracy and the hierarchy and the political games, and you'll no longer I'm assuming you're selling majority, right? >> I would assume. >> Yeah, and so your say is going to matter [ __ ] all of them. So, the you have fight left in you, you will probably run out your non-compete period or whatever your earnout period is, and then you will immediately have 20 ideas because you'll be so miserable during that time period. And I don't say this because I don't think that partnerships can work, not at all. It's just that it is a very different game once you become acquired. Like you're functionally an employee.

4:53Alex And you have to be cool with that, and a lot of people are. And so, I would just say um a lot of entrepreneurs are more depressed after they sell than before. And so, I would just be like, this is I'll I'll cross to to emphasize the point like you better be damn sure uh you're giving up your kid if you're not sure what the parent's going to do with it. >> Well, then I have a question for you. Would that take you more down the path of PE because you're now still building for something bigger?

5:20>> It'll They'll give you more autonomy than a strategic would, most likely. Again, everything is deal specific. It depends like there's a big massive it depends on this. Um but a financial buyer is going to be very much how They'll let you do whatever the hell you want as long as the numbers keep going up. And as soon as it doesn't hit whatever their model of projections are, they're going to take the company over, and it's going to be really miserable.

5:45So, that's that's right. Again, it's like if you want to take cash off the table, then that would be a completely acceptable answer to me. They're like, I just don't know. There's all this AI stuff. I just want to de-risk my family. I know that I can get this number and I'll get whatever 40 million bucks whatever the number is. After taxes, I got 30 plus whatever I've saved up. I can stick that in a bond and live on a million and a half a year, not even think about it for the rest of my life. And then I can go play at whatever I want to do.

6:11Alex >> And that's certainly a part of it. I mean, it's life-changing money. >> Yeah. And I think that's a completely acceptable response. And if you just said that, then I'd be like, have fun, man. Go do it. Um but if it's all the other things that make me say, well, if it's not that, then be sure because I think a lot of the things that you said, and I would This is I know I got to get to the other ones, but um I think if you can be and it's hard with, you know, 100 of your closest friends in front of you. Um but if you can look at yourself in the mirror and be incredibly honest with yourself about what you're really doing it for rather than what sounds good, cuz just being like, dude, I just want the money. I want to take out like take take the risk off my family. I'd be like, [ __ ] yeah, dude. Go do it. You worked for it. You earned it. You built something that was worth something. Give, you know, let them pay for it.

6:46Alex If you want all these other kind of softer thing softer as in less harder to find, I get it. Then I would I would think much harder about it. >> Thanks, brother. >> 100% man. Congratulations. >> Hey Alex. Um my name is Miguel. I own a solar company, solar sales organization. So we don't install. We recently opened a roofing and an HVAC division. We're doing 6 million in revenue right now and really my goal is to well, what's happening with the solar industry is the tax credit is going away.

7:24So I'm diversifying within the home services business and I want to go all in in HVAC, but don't destroy what's making money right now. So my biggest constraint is me [ __ ] my time basically focus on the solar and not building HVAC. >> So the decision that you're wanting to make is >> I want to exit the HVAC company in

7:51>> that doesn't really exist right now. >> No, it already exists. >> What what what percentage are you at of the six? >> It just has started, so yeah. >> Okay, right. The brand new company that barely exists right now is the one you want to exit. >> to build it and exit it. >> Got it. Um Okay, and you make call it five of your six million a year comes through solar and the other one is through hotch podge. Okay, got it. Um why do you have the roofing?

8:16>> We were already doing roofing for a lot of solar customers and >> Are you just selling it or you doing the delivery, too? >> With roofing, we're doing everything. >> Got it. And solar, you outsource and HVAC, you >> do everything. >> Got it. >> and HVAC, we do everything. Solar, I outsource the installation. >> Got it. Okay. Um So, you want to basically you're trying to jump from one vine to the next, right?

8:46Right. >> Really because of the market risk >> Yeah. >> Yeah. >> So, I'm going to bet that your constraint with HVAC is soon going to be getting the HVAC technicians to do the thing. And so, you'll likely be able to just basic basically as supply increases, transition guys one at a time over from one team to the next. Um and then basically have a smooth like reallocation towards the thing that has a higher enterprise value.

9:14Alex >> What period of time like will will be your goal on >> I think it's going to be about I mean, training a sales team on this is not that hard. >> Yeah. >> So, I think you're going to be supply constrained faster than you're going to be demand constrained. >> On the technician side. >> Yeah, so you're actually going to be like you're what you don't have right now, the problem that you're going to have. Um where where are my home services, bros? Okay, yeah. So, H find a bunch of H vacs, that's going to be easy, right?

9:39Alex Bunch of great guys, they'll just fall right in your lap. Um I don't know what you guys are doing. And so, you're going to What you need to have is I'm sure right now, how big's your solar sales team? >> 35 people. >> 35, okay. So, um you probably have the beginning of a true kind of talent acquisition process. You will need to have that same level of sophistication and funnel on the supply side. Which is how am I going to recruit, hire, manage, train uh sorry, did the order wrong there, but uh recruit them, uh onboard them, uh train them, and then manage them, you know, up or out. Uh that same funnel on the H vac tech side.

10:16Alex And that's going to be the next big constraint of the business. I don't think if you If you know how to sell door-to-door, it's very easy to get business. Um that will be the constraint of the business very soon. So, I don't think there's really any issue for you to like retrain the the door the door-knocking guys. That's not going to be tough. That's like a week. >> Okay. And we'll do it like now. I would just install >> Well, does LTV to CAC still work the same? Is it better? >> Well, we're testing it, but I do think it's easier to sell H vac than than solar. Yeah.

10:45>> Okay. So, if it's easier to sell, the sales guys is not going to be the issue. It's going to be delivering all the all the machines and installing them. >> Awesome. Thank you. >> what you got to focus on. >> Thanks. >> That was an easy one. That was That was light work. >> How do I do this? Just a little slower. >> Just shout out, you know. >> You want me to start talking? >> I hear you. You're good. >> Okay.

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