9 Acquisitions, $0 to $25 Million in One year - headed to Inc. 5000 E:48 Scott Shannon Top M&A Entrepreneur

Welcome to the top M&A Entrepreneurs podcast. We have a guest today. His name is Shannon Scott. Uh, Shannon's a lifelong resident of Alabama. Uh, he's. Uh, he's done M&A work, bought, uh, a company for $8000 in revenue and built it to $20 million and sold it. He's worked in, uh, built and sold 15 companies, startups for the last 20 years. Uh, welcome to the show, Shannon. Thanks for joining us. Thank you. Yeah, absolutely. I appreciate the opportunity to be here. So let's start about your journey. Now, have you always been an entrepreneur? Or did you work for somebody all the time and just say that's not me. Uh, I started my first company when I was 19 years old. So I guess you could say I've pretty much always been an entrepreneur. I think my previous job from my, uh, first business was I was a busboy at a, at a barbecue restaurant, you know, it's really big down here in Alabama in the South. So, yeah, uh, been an entrepreneur ever since then. Yeah, and uh let's talk about the, well the show is called Top M&A Entrepreneurs, but let's talk about that acquisition you did. Now, have you, how many have you done over your career? So I've, I've started 15 total companies, but I've acquired 9, and that's in the last 1515 years, yeah. All right, so let's talk about that first of all. What was that? First company was an IT consulting company. We did, now this was back in the day before, um. You know, DSL and cable internet. This was back in the ISDN days, uh, where we were securing networks with hardware and not software. Um, so we were, we were going into hospitals and major uh medical practices and securing it with, uh, hardware called Adran. At the time, it was a Cisco competitor, but we were one of the few groups in the Southeast that could do that. So I had gone out and actually hired a bunch of ad trend uh technicians to come work for us. We actually lived in a small town, townhouse together, gave them all equity in the company. So they were already servicing a lot of those accounts. So came over, worked for us, all became partners in the business, and turned around and sold it to a competitor when I was 23. Wow. How how was the accent? I mean, what did you grow the revenue to and uh We were, uh, we were just short of about 12 million on the exit. Wow. That's lovely. I mean, is it, uh, what did you feel at that time? Should I do this again or was you, were you happy with this life changing event? Oh well, you know, I think like back then most entrepreneurs wanted to do, um, I decided I was gonna take a little time off and try to be a professional poker player and lost. Say again. So moved out there for a while. Um, quickly realized probably after 3 or 4 months that I, uh, this is not the life for me. I need to be back in business. I need to be owning a business. So, and I started a few other consulting firms, um, learned a lot of lessons from that first business, um, for sure. Uh, I probably sold it too early, should have held on to it a couple more years, but I've always had that itch to continue to grow, acquire and start businesses. I, I don't think I'll ever get rid of. That I'll probably work to the day I die, for sure. Yeah. I, I, I love that. I, I will too. I'm 60 and I'll probably work till the day I die. Yeah. I love doing this. So, what was, you said you learned a couple lessons for that acquisition. One was to, you sold too early. Do you think you could have grown it to 50 million or $100 million in revenue, or what? Well, I think I, I, I think I could have, I definitely feel like we could have at least got to the $20 million mark within the next 24 months. Um, you know, 23 years old, somebody waves a $12 million dollar check in front of you and you're, you know, you're, it's hard to turn that down. Um, you know, I probably sold it for cheaper than I could have sold it as well, you know, these are all life lessons. Um, but, you know, the company was, it was a great learning lesson for me and, you know, I don't ever look back. You've got to continue to look forward. Um, that, that revenue from, uh, you know, that profit from that sell that company allowed me to acquire 3 or 4 more other companies within the next 4 or 5 years. Um, so no disappointment there, but definitely life lessons learned for sure. Yeah. Well, what was the multiple on the exit there? Was it, uh, I mean it was a one, it was a one time multiple. It was a service-based business, you know, a contract service-based business. So, you know, a lot of that. Uh, especially back then, I mean, those contracts were a dime a dozen, you know, they were going with the cheapest hourly rate, you know, not necessarily. A lot of those technicians back then couldn't be certified except on a few small things, you know, there's so many certifications nowadays for all the equipment out there, all the tech software certifications. Um, so it was a service-based business and the company did grow it. They grew our book of business to probably $30 million in revenue and then they did an exit. Um, I don't know exactly what multiple they got, but yeah, was that uh one act of sales? One exit sales, correct, yeah, oh, OK, yeah, that's how CPA's accounts so for to service based businesses. So you use the money on acquiring a number of other businesses. What same industry or what industry do you go to into? A little bit different industries. I mean, we did have a company that did some internet development work programming, so we went more from the hardware side of the software side of things. We built some large internets at one point. We built an internet for Mercedes, um, which is, you know, they had just moved to Alabama manufacturing, you know, there are a couple of their vehicles down here. So, um, a lot of, but a lot of more secure internet internal, you know, what you would consider now whether it be like a SharePoint. We were back in the day trying to build those SharePoint applications. Um, it, it became, it kind of grew into a, a marketing company as well, you know, we started developing websites, started developing some markup materials, doing video creations. Uh, so it kind of created a spun off on a life of its own. Um, that company, we actually rolled up into another local company as well. Um, I did not hold on to that company as, as long simply because I had another opportunity come across, uh, for an investment that was a highly, high growth company. They wanted me to be CEO so I kind of jumped from, sold that to my business partner and jumped to this new, this new entity. Yeah. What, uh, did you have to invest in it or they just wanted you to take over it? I did. Um, they were looking for capital and uh this was in 2007. I had owned a couple of small companies in between that that time, but 2007, they were looking for about a million dollars in capital. Um, and we were, you know, I had obviously just come off selling that, that other organization, but this was a, this was a company very similar to a company I'm CEO of right now. Um, we basically did business incentive consulting and The CEO, had approached me with my IT background and said, uh, you know, we'd like to talk to you about a possible investment in the company. We're trying to raise a little capital right now, a small company, they were, goodness, 77 employees at the time, about doing about $800 a year in capital or in revenue, excuse me, 800,000. Um, went in there and I looked at the process. It was a very paper-oriented process that they were doing and they're trying to service companies nationwide, and this is back when people were still using facts right, so people were faxing information extremely insecure. Uh, so when in, I said, listen, this is a, this is a great organization. The business model is amazing, but this definitely needs a tech play. You know, we need to turn this into kind of a software as a service, um, instead of a, you know, a service business and a paper-based business. So we did. We spent the next two years growing it as a software as a service back. Then that term was not very popular, right? It was software service companies were not very, you know, high-end in 2009. So we were one of the first to, to, in my book to consider uh launching a company of that nature. So, how did you make the decision that the, the growth of this company that was all paper, but nationwide was a lot better opportunity than the other one? Well, so this company has, it was unique. Um, there was very few companies at the time doing this. I mean, you could find a digital marketing and programming company on almost every corner, um, you know, back during that day. This company had 3 competitors in the country. At the time, 2 of them were Fortune 500 companies. So we kind of, we were able to sneak in and, and disrupt the market tremendously. You know, these companies, these larger companies were not nimble. They weren't developing technology. They were doing surveys over the phone, doing surveys over facts, you know, we're releasing mobile apps at the time, you know, on the, on the original iPhone. We're releasing, um, you know, SA-based software, a lot better security, a lot better screening. So we were able to pick off a tremendous amount of their clients, even their fortune clients, because of the fact of a lack of security, but B, this was a segment and not a core product of these businesses. So they weren't paying a lot of attention to it. It was, it was acquisitions that they had made previously. They weren't growing that side of the organization and allowed us to pick off a lot of clients. Yeah, how did you, you brought a million dollars into that. I mean, what did that buy you as far as a slice of the equity? And did you just say, I'm in charge also kind of the, uh, what I think it was, it was kind of a mutual decision. So, um, at the time it was a very executive heavy organization. I would say probably 80% of the salaries for going out to what you would consider stockholders or original investors of the company. Um, and just not a lot of work getting done and a lot of things being accomplished. So the CEO at the time was probably enjoying the fact that I would come in and be the bad guy a little bit, you know, put some pressure on the executive team, and, uh, and tell them they're gonna perform or they're gonna be out, um, especially because I was bringing, you know, some Financing to the organization. So I came on as president initially, stayed as president for a year, took over the CEO role, um, ended up doing an MBO management buyout, you know, fairly shortly after that to get the stockholders out of the organization, especially the underperforming stockholders. Um, and when I say underperforming, some had other businesses, you know, some just weren't able to contribute to the business and some just, you know, obviously didn't want to contribute. Um, so went ahead and did a clean slate on the MBOs, you know, kind of started from scratch, bought, bought the whole board out, including the original founder, um, and the, and the original CEO at the time. Yeah, and what did that buy you as far as the slice of equity, 50% or more, the original, the original investment bought me 20%, um, the NBO uh was a full buyout. Yeah. Oh, so 100%, 100%, yeah. Yeah. And what did you take that to with your So we, we took it to, um, just short of it my goodness, when I, when I bought it, it was about $3 million in revenue. We took it to about $10 million in revenue really quickly. We, we were an 8 500 award winner three years in a row. Um, and then when we hit about that $10 million revenue mark, we got approached by an organization that just was offering us way, you know, 3 times revenue. Um, at that time, which was just unheard of for that business, so we obviously jumped a chance to, uh, to get acquired, uh, from that company as well. We're gonna find money like that out there. Yeah, well, what, yeah, today is kind of might even been higher, but what was your feeling about that? You just, look, you went to the rest of the board or you went to 100% buyout we're never gonna get 3 X again or Was there any kind of, I'm trying to find out like why people sell. I have a mentor that says, hey, it's it's great to own it, it's better to sell it. Well, so at the time, um, the, the nature of the business is, um, really the revenue potential is a That um tax credit organization. So what we're doing is we're consulting companies throughout the country on business incentives that are available based on the federal government and Congress passing laws. Um, at the time that we sold, the climate in Congress was not friendly to business incentives. In fact, there were a lot of bills that were up there, uh, to pass. They, they didn't pass, but it was a very high, it was a very high risk, uh, initiative because, you know, in these businesses, they're high profit. But they're also high risk. So the Congress at any point would say, you know what, we're just not gonna give research and development credits anymore. We're gonna take that away, you know, uh, we're not gonna give business incentives for hiring people on welfare food stamp benefits. It's called the Work Opportunity Tax Credit program. Um, these are things that Congress passes and they've been passing for 20 years, but there was a lot of talk in Congress at the time, you know, that we're gonna probably cut back on a lot of these business incentive programs because, you know, the The culture and a lot of the talk up there was, hey, businesses aren't paying enough taxes, especially these Fortune 500 companies. They're not paying their fair share in taxes. So there was a big groundswell for that. And some of those bills did get um passed, uh, not the major ones, but You know, it was a risk-reward situation. Yes, we could have held on to it and, and grown the organization bigger, but at that time for what they were valuing the company at, um, and they really wanted the client list, to be honest with you, they were rolling it up into a bigger organization that did multiple things, was able to kind of diversify the service offering. Um, but you know, that risk was probably for the rest of the board not worth taking considering the temperament in Congress at that time. Yeah, was it, uh, 3x, it was all cash? Uh yeah, it was, it was not all cash. There was some stock in the deal for a couple of the executives and a couple of board members. Some of the other board members did not want to, you know, hang on and just get, they wanted the full cash for their stock. Yeah. That's impressive. I mean, and then what did you do after that? Um, I, you know, Took a couple, honestly, I said I was gonna take a couple of years off, but as the story goes from the first time we talked about, tried to do that, yeah, tried to do that. I actually bought a couple of, um, you know, invested in a couple of franchises, um, you know, during that two-year time that I was kind of working through what, what my next step is gonna be, um, did some venture capital for some small startups here in Birmingham, um, and, and currently, you know, I'm sitting on the board of some of them as well. Um, and then Came back out and launched a business after that two-year kind of non-compete situation was over and started a business similar to it, the business I sold recently. I'm not exactly like it, which we're taking more of a of a software, a heavy software approach and more of a, more of a kind of a white label and reseller approach for CPA firms. So it's a different business model but kind of same industry, um, but during that two years, I was just, you know, Investing in businesses, um, seeing where I wanted to be, figure it out, but I've got a passion for this industry, and once you have a passion for something, man, it's hard to let go of. Yeah, and those uh franchises, what kind of franchises did you buy there? So I bought a franchise. I actually bought a staffing company, um, you know, staffing's been a hot business for many, many years. Uh, climate right now is probably not the greatest, but this was pre-pandemic, and, uh, you know, these staffing companies, they do sell for impressive multiples, um, you know, if you hit a certain revenue number. Um, I also bought a pet care company. It's very similar to like an Uber where, uh, the oral wag, you probably heard of Wag, right, um, these people come to your house, uh, SoftBank, wasn't it? Yeah, yeah, so, um, this was a, this is a franchise that, you know, comes to your house and you, you hire sitters very much like Uber drivers and they take care of your animals that way you're not having to board them, um, and, and then I also bought a promotions company, um, so we, we do a lot of promotional materials for trade shows and things like that. Yeah, what was your grand plan because that's a diverse set of businesses. It was to diversify. It was to diversify 100%, um, you know. Yeah, we, we knew, um, me and my original partner, um, in the, in the larger company that sold, we knew we were gonna put something back together again. Um, I've also invested, I mean, just, you know, I've got a small investment in a distillery. We'll be one of the only bourbons distilled in the state of Alabama here this year. Um, so that's a passion thing, uh, for me. Um, I'm a big, uh, bourbon guy, bourbon connoisseur. So that's more of a passion thing, but he and I, and he and I are in that business together. We knew we were gonna put something big together, but in that, in that period, these businesses, especially the franchise, they're kind of self-sustaining, self-running businesses, right? They're Business in a box. I mean, you have to work the business and you have to, uh, you know, it's, it's quite an investment in some of these businesses, but I've got strong managers running the businesses for me, diversifying that portfolio a little bit and quite frankly, the first couple of years, it wasn't a terrible tax write-off because you know you're gonna take some losses in your first couple of years of buying a franchise, right? Your, your return on investments, you're probably looking at 5 to 7 years on most franchise businesses for a return on investments. So, you know, that helped from a capital gains perspective a little bit as well. Yeah, how did you, uh, are you good at selecting managers and just identifying great people to put in those roles? You know, I would say I've learned a lot over the years. I would say um there's not a method or a secret formula that I use. I do like high energy um people that have experience outside of that industry that can bring a fresh perspective. To the industry, it's OK to have some similarities, but, you know, you've got somebody who's been sitting in the industry for 20 years. They're gonna do what they've done every single day. They're not gonna bring fresh perspective or fresh ideas. But I think more importantly, it's about empowering the people. It's not making them understand it's OK to make mistakes. You know, I don't want you at my doorstep every day asking, uh, you know, for permission. I want you to ask for forgiveness, um, and let them be empowered and let them learn, but set expectations. Make sure they understand the KPIs when they first start that position. This is what I expect to do. These are the revenue targets that we're gonna hit. And here's the consequences if we don't hit them. And I guess the most important thing is bringing these managers in is giving them equity. Um, I truly believe that employees should earn equity in every situation, especially from a management level. Um, they've got to have skin in the game, um, especially in this climate right now, this employment climate. I mean, I, you understand that it's, it's, uh, impossible to keep people, but it's even more impossible to hire them. Um, so you're seeing more and more companies having to do that. That's something that we've done from the beginning. I mean, and, and most of my businesses that have sold, there's been either an equity payout to the employees or there's been a cash benefit or cash incentive for them upon the sale. Well, do when you go recruit somebody, are they looking for equity in a business like that's part of the pitch, or is it higher distributions? Um, it, it, it, it kind of varies, you know, I've had some employees that have flat out come in here and said, hey, look, you know, the only way I'm gonna make this transition is with equity. Um, but what I've seen, you know, more attractive to people nowadays is just this profit sharing. Um, you know, it, it equity scares people sometimes, especially people who've never owned equity in organizations and especially in a start-up situation, right? Equity to them means, uh oh, if something goes wrong, I'm on the hook for this stuff as well. That's not necessarily the case, right, especially depends on how you structure the corporation, right? But It does, it does sometimes kind of throw people off, especially who don't understand, have never owned equity, have never been in stocks before. So, uh, you know, profit sharing is, is much simpler to explain, hey, look, we make X, you're gonna get Y. Yeah, so what, what are the consequences if somebody doesn't hit their numbers, let's say the 1st quarter, 2nd quarter, what does that look like? Well, I mean, obviously, we're gonna, you know, I'm not a person who pulls the trigger. I believe in mentorship. I believe everybody should have an opportunity to learn and grow, personal growth and business growth. But I mean, there would be, you know, expectations. So we, in, in a first startup, I kind of give a 6 month period. I say, look, here's the first thing I'm gonna expect to you in 6 months. One is to learn the business. To is learn what the competitors do. I think the competitor SWOT is one thing every single business should do. The first thing they should do outside of hiring a couple of good people is understand your competitors, understand the market, get some time, and give them time to breathe and, and look at that. Um, and then at that point, you know, if they're not continuing to make, meet the KPIs, and I mean, that's, you know, unfortunately, you, you're in the business to make money. Um, you know, I, I use this kind of motto everywhere, um, everything's personal. Uh, you know, I, you know, I can't stand it when I get on, you know, I read these books and the self-help books and these business books. Oh, don't take it personally, it's just business. That's not true. Everything in life is personal and it, and I don't mean it from, you know, um, Necessarily competitive standpoint. But if you're gonna be in a business and you're gonna own stock in a business and you lose a deal to your competitor, that's money out of your children's pocket. That's money out of your children's college education. Take it personally. Don't have to get mad about it. Don't have to pout about it, but take it personally because when you start taking things personal, then it becomes a different scenario to you every single time you approach a deal, every single time you approach a client, or even when you make a customer service call. Take it personally. Um, and so, and, and that's the kind of people I want, I want people who will take these things personally. A loss is a loss. You learn from losses, you move on from losses, but you don't want to repeat that. Are you training people for that, or are you trying to identify that characteristic, how they, I mean, is there a kind of a test that you put through people through to find passion like that? There's not, uh, there's not a test. I mean, there are, you know, I have used services before where they've given, you know, um, psychological assessment testing, right, yeah, uh, but, but to me it's about the passion and the competitiveness, um. You know, I, I like to have ex-athletes, um, you know, they're very competitive people by nature. Um, one of my most, one of my most successful, um, managers has been, who was a former, um, you know, Miss Mississippi, uh, a beauty queen. She's very competitive by nature. Um, so it, it to me it's about the competitive heart and the competitive spirit. Um, you can learn almost anything. If you have the desire and the will to do it, you can learn almost anything. Some of the businesses I've been in my life. Like that first business I was telling you about that only had 3 competitors that when I invested in 2007. It's There was no business like it out there. I couldn't go hire experienced people, right? Cause you can't hire experienced people from a business that you're creating. Um, so it's got to be about something else. It's got to be deeper than that. It's got to be the willingness to learn. And this new company that I have today, 95% of my employees have never been in this industry before. But they're learning, they're training, we have a corporate trainer on staff and our corporate trainer's job is to train them on a daily basis. Anytime there's something new, you're, we're out there training. We're doing lunch and learns, we're continuing to, to self-educate our, our employees on a, on a monthly basis. That's on incentive. That's correct. Yeah, yeah. How big is that now? Uh, our first year we hit $25 million in revenue. $25 million the first year, and that was a startup or a, yeah, it's, it was a startup. Wow, um, we're on track, uh, you gotta explain how you did that. How, how did you do that? Yeah, get to 25 minutes. Uh, it was a combination of experience in this industry, um, a combination of learning how to streamline. A sales process and a partnership process where we don't have to reinvent the wheel. So we rely on a lot of partners to bring us business. We don't have a huge internal sales staff. Um, we do referral, referral partner relationships, strategic partner relationships, we partner with software companies. So we had a network of people there that we've used previously we went back to. We got some help from Congress and quite frankly, we got some help from COVID unintentionally. Um, but there were some bills passed in Congress to help small businesses with, you know, COVID recovery, and part of what we do, our consulting is, is part of business recovery and business incentives, right? So it kind of hit perfectly at the same time, um, but we've been able to do this with a very skeleton staff. We have less than 25 people on staff at, at the, at the moment, which, you know, is tremendous, but we're on track to do 50 million this year in revenue. And right now we're looking at 2 acquisitions of companies in the next 2 months that will, you know, enhance that even more. Yeah, and this is the uh R&D tax credits and R&D tax credits, work opportunity tax credits, um, disaster incentives, you know, if, if your business is affected by floods or hurricanes or fires, there's all kinds of government incentives that come behind. Um, they're trying to encourage businesses to remain retain employment. You know, your first natural reaction is any CEO when something bad happens is let's get rid of our most, you know, our biggest expense, which is always labor. Um, these government programs are trying to incentivize businesses say, hold on, stop, take a breath, don't fire everybody. We know there's something bad happened. We're gonna come in with some incentives, um, and sometimes they're cash for funds, sometimes there are incentives on future taxes, but just, just take a step back, take a deep breath, we're here to help, um, and, and that's got to be a learned behavior, right? So the government continues to try to do these things after a disaster or, you know, a pandemic. Is that, is that most of your business now is from the uh disasters, or the reason I bring this up is is I ran across a guy that owned the IT company and started another company called Strike Tax, which is R&D tax credits. And he said that's taken off, and he's gotten all kinds of uh publicity, uh, attention towards that. He thinks that's a billion dollars opportunity. Yeah, I mean, it could be, there's an R&D is one of the things we do, so something similar. We do some, some different types of credits as well, like the work opportunity tax credits and new higher credit. So if you hire people based on certain demographics, um, for example, veterans, if you hire veterans, there's, there's federal money for doing that. If you hire felons, people on welfare, food stamps, unemployment, that's a huge opportunity. I mean, unemployment's what, you know, one of the biggest categories in the country right now. What is it? 40% of, of all able-bodied American workers on some type of government benefit right now. Um, so as you hire them back off of unemployment, there's, there's, there's business incentives there available to you. R&D is one of the things about R&D that's so appealing right now is that it was made permanent. Um, you know, a couple of years ago, uh, it used to be a bill that was kind of fluctuating back and forth or whether they would renew it, but the permanency of it, I think makes it very attractive. It's a lot of work. Um, it's, it's difficult to have mass quantity of clients when you're doing a lot of paperwork. So, and I'm sure this individual that you know is probably developing some kind of software component to it. It's something we, yeah, that's what we did as well. Yeah, let's go back to, I want to go back to your business model. So you relied on other channels, kind of like an affiliate network or distribution network to get the message out about your product. Yeah, absolutely. Yeah, I mean, so we could, you know, the, the, we could hire, go hire 100 sales people. I mean, if you're in a payroll company, you know, if you're working for an ADP or your manager in ADP, their success is based on sales reps. Um, they put a bunch of sales reps on the street, there's a lot of high turnover, a lot of training. Our model is a little bit different because of the speed we had to get to, uh, to revenue. The speed I wanted to get to revenue to take advantage of some of these incentives that do expire, I could go hire a salesforce of 100 people. That takes time, it takes training, it takes effort, or I could bring in a core group of people that I trust that I know can learn quickly and rely on partners to give us leads. I mean, we're gonna pay $7 million in commissions out just based on last year. Um, you know, for a group of 50 or 60 business owners and a couple of, you know, independent sales agents, that's a lot of money. Um, we've got a, we've got a retired, uh, HR consultant in Mississippi that we're gonna give $800,000 commission check to this year. She's been retired for 17 years, I believe. It's a pretty good payday. Yeah, that's a great payday. So you had, let me go back to that. You have 25 employees, right? So it's your something like that. Yes, 25 and doing about a million per employee, it sounds like that's correct. And, and most of those employees are are service and software technicians, um, so we only have 5 full-time sales reps. Wow, uh, what's your plan for exit on this one? Are, are, are you courting private equity funds to say this is what we're doing, to kind of build up the excitement around this, or are you waiting for somebody else to go, ah, we got to buy this company? So, you know, I've always kind of raised my businesses off of two different philosophies. One is we can build a business or two is we can build a business to disrupt the market. Um, these types of businesses that, that I'm in right now are definitely disruption businesses. What I mean by that is we're gonna go after The big boys that are playing, we're gonna go after the fortune companies. We're gonna go take a percentage of our market share. Um, this is not a business I'm looking to exit in the next 1 or 2 years. I do have some acquisitions I'm making right now, some strategic acquisitions, um, for tech and for client base as well. So, you know, one is a, one is an IP purchase, one is gonna be a stock purchase, um, but it is to buy market share but also to increase awareness. These are gonna be big splashes, um. Uh, a lot of headline, a lot of press is gonna be, uh, a couple of these businesses are very unique businesses that complement, they're not the same business that we are, but they complement the services that we offer. Um, and then we'll look at, you know, equity at some point, some private equity at some point, maybe, you know, mid next year. But right now with our revenue and the track of our revenue and profitability that we're, we're making right now, there's really no need for capital. I mean, if we do, I can put the capital in myself, but you know, $25 million a year with 20. 5 employees, you can understand in Birmingham, Alabama, our overhead is not killing us by any stretch of the imagination. And if we had 50 million this year, I mean, we'll, you know, we're at a 60 to 65% margin. So you're on to target towards 50 million after just two months, or is that a different uh calorie here? So by the end of this calendar year, um, our target is 50 million based on, based on our growth patterns and based on the clients we've already signed up. Yeah, and how are, um, what about the employees here? Do they own stock in the company equity and uh we do have a, we do have a group that do own equity and everybody else does get profit share. Yeah. So, um, everybody in the organization is either getting a profit share or does have a, a small percentage of equity in the organization. Yeah. When you go back to that, those two acquisitions you're making, you said that one was IP and one was stock. What, what do you mean stock and products of inventory or stock? No, I'm sorry, it was gonna be a stock purchase. So we're buying the whole company. We're not just buying the IP assets. So, you know, essentially being the IP one would be an asset and one would be a stock purchase. So, um The intellectual property of one of the companies we're looking to buy is very complimentary to and, and preventing us from having to build some software right now, to be honest with you, um, would probably take us, you know, 12 to 18 months to build. Uh, the other is, you know, it's a, it's an extensive client base, um, it's a perfect fit for our client base and for our core product offerings. So our goal is to buy that company. And approach that client base that they currently have with our service and product. Yeah, that's beautiful. Are they profitable companies? Well, those are one is a break even and the other one is profitable. And you could immediately, just like the person that bought or the company that bought your company for 3X plug it in and probably pay for itself really fast. Uh, we, we will, uh, at minimum triple their revenue in year one. At minimum, that's 2023 or as soon as you acquire it. Yeah. And how is that purchase, uh, is it your cash out of pocket? Are you trying to finance it, LBO? What? Uh, it's, it's gonna be a stock and cash, um, 85% cash and the rest in the stock. Yeah. Yeah, that's lovely. I mean we're gonna see you on now you're already on the 8 500, weren't you? Yeah, well, we were, we were back in 2007, 20 2009. 0 yeah, we'll definitely be this year. I'm, I mean, out of, uh, we went from the company actually initially launched in 2000 and uh. 20 in November 2020, so very little revenue and you know in 500 is based on year to year revenue growth. So from going to 5,000%, yeah, from going to a couple $100,000 to $25 million in year one is probably gonna have us, I would imagine probably at the top. Yeah. Probably somewhere up there. So what is this? I gotta go to back about, you know, who Shannon is, like, what motivates you to keep doing this and, you know, keep seeing these opportunities and just going back to the well and says I gotta do this. I gotta do it. I feel it. Well, I think motivates me, and this is probably pretty cliche answer is I, I have a group of children that are very entrepreneurial spirits themselves. Um. My 13 year old daughter runs a sugar scrub business already uh on Etsy and a sugar scrub business. It's like a skincare business on Etsy, um, you know, her first day in business, I think she sold like $1200 of merchandise her first day in business at 13 years so she do that? I mean, you gotta get attention to what did she do? She, well, I mean, she, she made some creative videos and um we spent. We spent some ad dollars and, you know, she's 13 years old and she's, she's determined or she's, when we first sat down and talked about this business, she said that, you know, I want to give a percentage of my profits back to children with, with cancer. And of course, she, you know, that messaging is part of it. She lives up to that. I mean, we, we do the same thing every day here. So you're aware our percentage, 1% of all of our profits go to veterans, job programs in our company, and then the other percent Of profits, uh, so we have 2% of profits going out. The other percent goes to disaster recovery, um, programs, local disaster recovery, not a national Red Cross, but as if hurricane hits Houston, Texas, we're gonna find a local charity and the percent of those profits will go, um, to that as well, so. We believe in giving back to the community and, and, and doing business with integrity, but you know, I'm teaching my kids to do the same thing and they're, they've seen this grow over the years and I also have adopted two kids as well. Um, they are, boy, they're entrepreneurs. They're asking me every day. They wanna come work here every single day. So I think that's part of the motivation, uh, to keep going. But the other part of the motivation is, you know, I, I look at some famous. Uh, some famous football coaches in history and also look at my own grandfather, to be honest with you, uh, in Alabama. I just can't think of them. Yeah, right. Well, there was a coach, there was a coach, um, and it's so funny. My, my, my grandfather before he passed away, told me this. There was a coach, you know, somebody might know him. I think his name is Paul Bear Bryant or something, um, there was a. There was a, in a new coach, everybody goes, Paul who? Right, exactly, right? Uh, I think he's kind of taken over a little bit, uh, especially for the younger crowd. My, my kids don't know who Paul Bear Bryant is, but I remember watching an interview when I was a kid with his wife, and they, somebody asked him, the local reporter said, or asked her, what's gonna happen to him when he retires cause he's been in football his whole life, and she said, well, he'll probably pass away. He won't have anything to do. He'll be bored to death in, in a tongue in cheek manner, like he, he probably, um, I believe if I recall correctly, I think Paul O'Brien, after like 8 or 9 months of officially retiring, died. Um, you know, I think there's, and, and my grandfather was saying, my grandfather worked, my grandfather passed away at 98 years old. He died, uh, or, uh, he worked until he was 97. Um, he, uh. He set an example for me, and I'm not saying that everybody should do that. You shouldn't enjoy life, don't get me wrong. But I think there's something about waking up every morning and have something to do and have something to accomplish in that brain activity that keeps you going. And I want something to accomplish every single day. I would be bored. I'm just not a guy who wants to sit with a fishing pole. I know a lot of people enjoy that. I'm just not that guy. I want to be in an office doing a webinar, doing a Zoom meeting. That's the kind of thing that, that motivates me. Yeah, I tell you, you uh follow Charlie Munger. I mean, both of those guys. Charlie's 98 years old and still loves doing what he's doing. Absolutely, absolutely. I mean, I, I'm, I'm hoping to, and I would probably tell you that, you know, uh, my significant other would probably not want me working that late and I probably won't go to 98, but I'm, but I'm always gonna be doing something, um, you know, so. I, I, it's just, it's just good. I, I, I wanna go back to your kid there, that uh $1200. You touched on a thing that's really people are doing today cause Snoop Dogg does it, Ryan Reynolds does it, uh, uh, the Rock does it. They productize their audience. They build an audience and then they sell to that audience that they do. Oh yeah, absolutely, absolutely, and she does. I mean, she understands the audience and quite frankly, the majority of people buying the product from her are moms. They're saying that they're 1 year old is selling to moms. Yeah, I think, yeah, I mean, it's a, it's a, it's a female product. It's a body product, but, and she's homema it, but I think they see her on that video and you know she's appealing to them, and she, my daughter understands the market. I mean these mothers have children too, you know, and they want to support another child who, you know. They want their child to grow up and maybe start a sugar scrub business. So we actually see that demographic and you can see a little bit about who's purchasing those products and, you know, I mean, parents to support parent, parents support kids and my goodness, those videos my daughter does, they, she's going straight to their heart, 100% straight to their heart. Who, who helped her write the script because the, the content is one of the most important things to get people motivated, having a great offer. I would say, um, you know, obviously help her polish the script. Um, you know, I have some people around me, obviously marketing teams and stuff that have helped, you know, polish the script as well. But she went around to some of my neighbors or females and said, hey, well, first of all, here's some samples of the product. So tell me if you would buy it, but also tell me what you think about it and what you feel about it and what it makes you feel like when you use it. Ask, yeah, just ask. Yeah, and she got the feedback she needs and so she, she kind of, you know, created the content or she gave me an idea of what she wanted the content to look like and we, you know, obviously helped and and ran with it. I mean, obviously she's not creating videos on her own. We're getting a little assistance there, but she's actually showing videos of how she makes the product, so they're seeing exactly step by step of, of what goes into that product. So I was, I was impressed. Yeah, that's amazing. Uh, what if she comes to you and say, hey, I don't want to go to college? You cool with that? I, I'm totally cool with that. I, I am, I am going to encourage my children to do whatever they wanna do. I've got, you know, I've got a child who's probably gonna end up in a, you know, an Ivy League school who's, who's also a tremendous soccer player, and, uh, he could pretty much go wherever he wants to, and he wants to be an accountant. He doesn't necessarily want to be an entrepreneur. He wants to be a CPA or something, um, knock, knock yourself out, yeah, right, I mean, maybe one day he'll come work for me and be one of my CPAs, but you know what. It it's about their dreams. Uh, I got to live my dreams. I wanna encourage them to live their dreams. And if it, if it's, you know, doing a sugar scrub business or it's becoming a hair stylist and opening a salon or something, you know, that's their passion, and, and I want them to do what their passion. So how are you as a dad? Do you tell them to outline what they should do or they wait for them to come, ask a question, and you answer it? Oh no, I definitely wait. I definitely wait. I, I'm, I'm not outlining anything for them. I'm encouraging them to be creative and come up with things, and they're seeing it. Now, you know, one of the things I think I would regret if somebody asked me what my, one of my biggest regrets was, is, you know, raising companies like this is raising children, and you're on the road a lot. You're working a lot of hours and, you know, I probably missed some things that I regret missing in my children's life, but I think they're seeing that now, and they're seeing that work pay off and they're seeing some of the advantages they get out of that. And what probably was hurt at the time has become more understanding, but I think it drives passion too. Um, sometimes you got to miss the soccer game for a meeting, right? And it's terrible and, and you, you get home and you feel guilty about that, but my 18 year old son, he's like, you know, hey, I get it now. Like I get why you did this. I get it because you gave us the opportunities to do these things that we want to do. Yeah, I, that's beautiful. I mean, I just, this is a weird thing, but I just watched something, I think it was Netflix at the uh the Manning family, you know, Eli, Archie, uh, Payton, and Cooper. He just wanted to be a dad. He didn't want to, he just wanted to be there because his dad, he walked in, his dad just committed suicide. So his job was just to be there for his kids, a dad, not an NFL dad, not an NFL coach, just a dad. Yeah, yeah. And, and I think, I mean, there's a lot of people who can balance that, but, you know, again, in any situation, especially when you're starting a business. I mean, you know, I, when I'm mentor and I teach, you know, people on a daily basis, I get phone calls, hey, give me some advice for this, this and this, and I'm like, everything you think that starting a business is gonna be, throw it out the window. If you think that you're gonna take 20 vacations a year, throw that out the window. It doesn't matter how successful you are, you still aren't, there's no such thing as vacation. Your cellphone's gonna ring, you're gonna have an employee problem, you're gonna have a client issue. Forget all that mess. I don't care what you've been taught or what you read in a book somewhere. You gotta be prepared to put in the work and it's gonna be 1214, 20 hour days sometimes and you're gonna have to understand, you're gonna miss some of the things. You're gonna miss some of the things with the kids, with the family. That's just what being an entrepreneur is about. Some people are cut out for that and some people aren't. Um, you know, it takes a special type of person to realize that they're gonna miss out on a big portion of, of their most important important asset which is their children. Um, but hopefully they're learning and growing through that experience that the kids are in the family is as well. Well, I think your kid, your 18 year old, they just had just said, well, I see why you did it because it gave us these, uh, these other opportunities. Yeah. Yeah, absolutely, absolutely. Well, Shannon, I, I wanna appreciate you, uh, just spending 45 minutes with me. This is lovely, and we're expected to see you on the Inc 5000. Is it in 500 or in 5000? I think it's 5000 now, but we're hopefully we'll be be underneath the 500 mark. Well, yeah, if you go from 0 to 25 million first year and then 25 to 50, uh, you're gonna be on there. Yeah. Hey, how does that help you? Do you, do you like the accolades and the recognition or does that help you get business? Well, you know, I don't honestly think that anybody's ever made a choice of our company because we're an 8 500, uh, you know, recipient. Uh, you know, when it comes down to it, to me, it's, it's about the product and the character and the integrity of the organization, but, um, it does help on a marketing perspective, but the, the ink events, and of course I know pandemic wise that probably hasn't happened, but I remember going to those in 500 events in 2007, 2008, 2009. It is an amazing networking event, um, and I think that's probably the best benefit, you know, you've got. You know, 4000 CEOs of companies that are showing up to get an award, but they're also there to learn and they're, they're, they're, they're in a network and you know, we don't even go to trade shows anymore and set up a booth. We go to them, but we don't booth, we don't set up a booth anymore because I think that's just lost a lot of luster. What we do is we go there and network with other partners, set up dinners, do those things. So to me that was the real reward of Inc 500 as far as the business is concerned. Um, you know, it's great to have that plaque on the wall, and it, and it does from a recruiting perspective, I think it can help you from an employee base because they understand you're a stable company and your company. Yeah, I definitely get noticed on the private equity because private equity sits there and looks at those companies and go, Well, what about this? Oh yeah, for sure. We had, we had, we had a lot of calls. I mean, the 1st 3 or 4 weeks that magazine is released, you know, your phones ringing off the hook as a CEO and you know, hey, hey, are you interested in this, this and this, you know, at the time we're like, you know. You know, we're, we're good. We're growing, we're sustainable. We've got great cash flow, but, but it is a great, it's a great opportunity. It's a book a list for them to invest in. Yeah, let me, let me ask you a question, one last question before you go. I, uh, do you have a group of masterminds that you work with, other coaches, mentors that run 100 $500 million dollar businesses that you can go to? So I do, I've had a mentor when I was fairly young. Um, he is, he is retired now, you know, I will bounce things off of him, but I'm part of a local group. It's called Visage, sure if you've heard of it, yeah, so it's a local CEO group here, um, and where our headquarters are. So, you know, I do, uh, have, and, and this is a fairly new thing to, uh, for me to Birmingham, but, um, you know, I, we network on a monthly basis, you know, we're able to drop ideas, bring problems to the table. And I think it, I think it's important. I think every, it doesn't matter how successful you've been, I think every CEO should surround themselves with 33 really good people. One is somebody, a mentor that you trust, 2 is a strong CFO. Um, and when people ask me like what I spend most of my money on or what it was my best investment, it's a strong CFO. There's probably only one person in the organization that's ever been able to tell me no for 20 years and that's him. Because, you know, as a, as an entrepreneur, I wanna go, go, go. I wanna run, run, run. I wanna sprint. There's no such thing as walking. And to have someone you trust enough to be able to walk in your office and say, hold on, we're not writing this check today. We're not spending this money. We're not gonna do this acquisition. Um, that's something that I need around me all, all the time and I think the, the final thing is a supportive, you know, obviously family group. Um, you gotta have people behind you that support you. So those are the three main keys to me. Lovely. Did the, did the CFO say yes on both of these acquisitions you're working on? Uh, yes. All right, I got the buy in there. Good deal. Hey, Shannon, thank you very much for spending time on the on the top M&A entrepreneurs. Absolutely. Great to be here. Appreciate it, John. Take care. Cheers.