82 YEARS OLD and Still DOMINATING Business Acquisitions

 Summary

In this conversation, Jon Stoddard interviews James P. Shanahan, author of 'The Accidental Entrepreneur.' Shanahan shares his journey through various business ventures, including the challenges of acquisitions, the lessons learned from failures, and the evolution of his family-run businesses. He discusses the importance of understanding working capital, the pitfalls of high leverage, and the strategies for successful acquisitions and growth in different industries. In this conversation, Jon Stoddard shares his extensive experience in business acquisitions, emphasizing the importance of due diligence, strategic partnerships, and maintaining integrity in business practices. He discusses the evolution of his companies, the role of family dynamics in business, and the necessity of continuous learning and mentorship. Stoddard also highlights the significance of cash flow management and adapting to market changes, providing insights into his investment strategies and the importance of chemistry with business partners.

Takeaways

Don't do highly leveraged transactions without understanding working capital.
Growth can sometimes suffocate a business under debt.
Family partnerships can provide a strong foundation for business ventures.
Franchises may not be the best route for new entrepreneurs.
Seller financing can be a strategic advantage in acquisitions.
Building rapport with sellers is crucial for successful negotiations.
Understanding industry metrics is key to making informed decisions.
Catering can be a lucrative business if managed well.
Acquisitions should align with the overall business strategy.
Flexibility and adaptability are essential for business growth. Partnerships require clear communication and due diligence.
Due diligence is crucial to avoid renegotiation pitfalls.
Building chemistry with sellers is essential for long-term success.
Cash flow management is vital for business sustainability.
Investing excess cash can create additional revenue streams.
Family dynamics can complicate business relationships.
Integrity in business practices fosters trust and loyalty.
Continuous learning is key to adapting in a changing market.
Mentorship can significantly impact personal and professional growth.
Successful businesses focus on consistent, incremental growth rather than seeking quick wins.

 

 Watch the Interview:

Transcript:

Jon Stoddard (00:00.502)
on the.

Welcome to the top &A entrepreneurs. I've got a special guest today, James P. Shanahan. James has got a great book out. It's the Accidental Entrepreneur. It is not released yet, so pre-order at Amazon. I am not an affiliate. It's just a great read. The reason is because it's so detailed in the magazine. And if you got my email newsletter, you'll also see all the acquisitions he's done. And I'll share this.

This is with Shanahan Limited Operating Partnerships. I count 29, active status. Either got operated, closed, or sold. So welcome to the show, James P. Shanahan. How are you? Good, John. Thank you very much. I've always enjoyed watching your podcasts. that's cool. So I got to go to a couple of questions here. The first act was, now you were working at a W-2, and then you tried to buy a

train company and then you bought it with an LBO, which was overloaded with debt. And you just, that was a big lesson there. And you talked about that in one of the first couple of chapters. Like, what was it, what did you take from that? Just don't do that kind of debt, that debt level. What? No, it wasn't, it wasn't a debt level that what I took from it was that if you do do a leverage bot, if you do a highly leveraged transaction, that the, that you, have to throw away the growth.

mentality that I had from many years of being in sales. It was all about growth and sales. Somebody else had to worry about the working capital. So I thought I knew everything and discovered I was totally ignorant when it came to working capital. And growth is not the thing you want to do when you take on a lot of debt. What you want to do is grow your margins. Do the blue collar stuff. Grow your margins. Get your expenses down and

Jon Stoddard (02:00.334)
quickly pay down debt as fast as possible. Pay down debt and definitely don't bring a corporate culture where you have perks, country club memberships, big company car, throw all of that away and make it strictly on the basis of when the company starts to get debt free that your real income is gonna come long term and that the increasing value of the company. Instead, we grew and we grew tremendously.

The growth is what suffocated us because our lender was Westinghouse Credit at the time. when I the names are a lot of names are changed in the book. I'll try to use the right names here. The Westinghouse Credit was our lender and they couldn't understand why our total debt was going up each year. And it was really going up because we had the fund, the working capital and the net working capital was about 15 cents on the dollar, 15 to 20 cents on the dollar.

our pre-tax margins were about 10%. So we had a 10 % gap every year as we grew, which would be make up enough next year, but we continue to grow. Yeah. Was that because of the nature of big cost of goods, the cost of goods were so high and the turnover was just slower with the cashflow? The nature of manufacturing, was a manufacturing company.

Nature of manufacturing is high inventory, a lot of work and process. Your jobs extend over, in many cases, 12 months. So from start to finish, when you book the order, it's 12 months before you ship it. So you grow your working capital every month. I mean, excuse me, you grow your inventory every month. And in many cases, it's completed contract method of accounting, so you can't invoice until you're finished. In some cases, you may get progress billings. So your receivables are going up.

your inventory is going up and that has to be funded. if you're going up, if you're growing 10 million a year, you've got to fund $2 million. And if you're only making on that 10 million, $900,000, you got a million one gap. I know all of this now, I didn't know it then. Yeah. Now, could you have like, what are the three things you could reduce, increase prices, you could have reduced all the expenses.

Jon Stoddard (04:27.758)
And then pay down your debt or refinance some higher interest debt. Reduce your cost of goods sold, which is a big variable expense. And I was originally an industrial engineer, but I had spent most of my career in the previous company working for wages in sales. So I forgot all about my industrial engineering training. And that's the type of training I originally had. If I had to step back.

made the change, ate the drop in ego and identification and became an operating guy again instead of a sales guy, we would have done well in that, but we didn't. So we eventually, Westinghouse Credit, we had a technical default. We were always up to speed on our interest payments, but we had a technical default on our debt to equity ratio and they decided to get out into business and they shut us down.

Yeah, that's so that took a while to unwind for you. But I love your statement of what that bankruptcy feels like. You're sitting in your shit in your pants. And you're the only virgin in the group. Everybody else, you know, all the hires that you have to hire the CPAs and the attorneys, they all know what they're doing. Yeah. What you don't know is that they're going to be there. And this bankruptcy is going to go on until you run out of money. It behooves them to

spread it out more. Their incentive is not your incentive. Yeah. You want to get rid of those pants and they want to keep getting paid. man, that's crazy. By the way, in this book, and I'm going to recommend it again because after every chapter he talks about post-mortem, what he learned and what his ego took as a hit and what I should have done or could have done and what I didn't do.

Highly recommend that book again. So how did you go? I know that you found this fresh Max was that was through a broker or what was that through? That was a contact or. we first, you know, we, we decided to form a family partnership. Yeah. Yeah. My wife and five, four sons and the four sons had very little work experience, all brand new guys, two of them had hotel and restaurant management degrees.

Jon Stoddard (06:53.358)
One was an MBA, one was an advertising major. And one of them, at the time we decided to go in business, was a sous chef. And of course, my wife had tremendous cooking experience. So we decided to form a partnership and took all of our savings, which was at the time, about $500,000. That's quite a bit. I mean, you made, you know, for 1992 or 90s, the ride or that, that's quite, I mean, it was quite, yeah, it was, it was. I didn't realize it at the time, but it was quite a bit. So.

I had gone, one of my last functions working for wages was I had to go to California on a problem job in a refinery. We had a crane problem and I flew out to California and I had a quick, I had time for a quick lunch and there was a place out there called La Salsa, which was kind of a boutique Mexican concept. And they had a, like a salad, they had a salsa bar, which was unique. They made, had homemade salsas and.

and my wife was a great salsa maker. My wife is Mexican background. So I knew good salsas. And this place, I really liked the place. And so I grabbed a menu, back to Houston and my number three son, the MBA, he had been up in Dallas for the weekend. He comes in with a menu. This is while we're starting the partnership. He walks in with a menu for another concept, which I call fresh mix.

in the book that wasn't the name of it, I call it Fresh Macs, that was started in Dallas exactly like this La Salsa. And I thought it was providence, was an opportunity meeting our need. We immediately started looking into that and that's, and we approached the, that was a franchise and it was a new franchise. And I thought it was something that could be taken out nationally. It was going to be very successful. So we committed of that million, mean of that half a million,

We committed 300,000 of equity and borrowed through the SBA at the time, around 700,000. So we had a, it was a mild leverage, but the SBA spread your loan out. And we contracted for three of these. So three of the sons were gonna be managers. Each son was gonna be a manager. My youngest son was gonna be a rotating manager. And so our first deal was a franchise, which I don't recommend. It's in the book. I say three ways to get started.

Jon Stoddard (09:18.574)
One is to start from scratch, I say forget that. Second is franchise, and that's just being what I refer to as a surf. So theoretically, you if you're growing a product on your land, but the landlord's taking all the money. So the franchise takes all the money. And the third thing to do is acquire businesses yourself, and that's what we do.

Yeah. So what happened to the fresh max? I see in your active list and all the viewers are going to get this because I'm uploaded. You close that down. It just didn't, didn't work out, but it did have provide a lot of cashflow for you for a lot of cashflow. Initially, was, it was, it helped my, learning curve for my sons and, we were up and running and my wife and I were in the background, doing back office work for the.

for my sons, was training my sons and we eventually shut it down and overlaps with an acquisition. So we overlap with an acquisition and shut it down, but everyone got paid, everyone got paid. The SBA got paid, all the vendors got paid. We didn't file bankruptcy. We just had an orderly shutdown, which took some cash. And so we used the next acquisition, which flushed out a lot of cash where we bought

cashflow and it had a lot cashflow and we use that to restructure and get out of this initial franchise. Yeah. So would you say you wouldn't get in the business restaurant business ever again, but you did get into catering a little bit later on. I'm to get that later, but you got the next one up was James manufacturing, which was a purchase cost greater than 2 million cash. used the 12 % debt, 88 % and still operating. Yes.

and producing excellent cash flow. So while we were operating the franchise, I had an employment contract that was gonna expire. So my wife and I were taking no income from the first business. So my sons were all working for reduced salaries for sweat equity because we gifted them a lot of the shares. And my wife and I were taking nothing out of the business.

Jon Stoddard (11:38.754)
And I had an employment contract with the last working for wages that was going to expire. And I was sitting in the kitchen on Thursday. know it's Thursday because the Wall Street Journal puts small business ads for sale at the time on Thursdays. And I see this very small ad for a manufacturing business in Texas. And I responded to it. And it turned out to be James Manufacturing, which was in Northern Texas, about a two hour and 45 minute drive from Houston. And

And I very, this is where broker, some brokers can be exceptionally good. I was fortunate again, lucky, by the way, I said to my sons, I've got, know, the Irish historically have a lot of luck, but I've warned them. I said, I've had all the luck. You got nothing, there's nothing left for you. So I wind up with this great broker and I like the deal. you know, I get the financials and it's what I know. I know manufacturing.

and in it for years. This company has a great future. And, but I said, you know, I don't see how I can get this done. I said, because I'm, I'm left with, I had a couple of hundred thousand dollars left and this is a, this is a two and a half million dollar purchase. And, and he said, I can get it done. So he said the seller would take a million eight note, which by the way, you had a question in there about, and on your site.

That million eight, know, lenders look at that as equity because it's behind everything else. It's behind them, it's behind everything. So a million eight, a million eight seller's note is like a million eight investment to the bank. Right. I can get you a million eight from the seller. He said, I've been in the bank in Corsicana and he says, I can get 400,000 from bank. I think it was there on that. Anyway, I was going to have to come up with a couple of hundred thousand notes.

It was a stock sale. So I had access to all the cash that the company already had. We were going to use some of that cash to get the deal done. So it became highly leveraged and which was okay, except for one thing, the seller debt. And I could have negotiated differently again, ignorance, the seller debt. made prime plus and a prime went up considerably. Like today it went up 75 basis points. that's they announced it.

Jon Stoddard (14:05.601)
Yeah, they did. I saw this morning. OK. So prime went up considerably. And for a period of time, we were operating with negative amortization. So for your viewers who don't know what that is, your principal and interest payment is fixed based on the original interest rate. And I think we did a five-year note with a 15-year amortization. So the principal and interest payment is fixed. But.

the principal portion of the loan is not going down because the increased interest is eating up too much of the principal and interest. Yeah. So I refinanced with the bank. And by then, we had accrued a lot of cash from the catering company. And we used a bunch of cash and went back and refinanced with the seller, paid his loan down with cash.

and refinance did a 6 % fixed rate. I think it was 6 % fixed rate. And off we went with great cash flows and being able to fund additional acquisitions. Why do you think that James manufactured the seller was so motivated by taking seller financing? mean, this is like you talking to your book about the start of the two tier retirement plan.

I think it was started. So why was he motivated by that? It's like the tax advantages plus what? Yeah. Okay. So I never gave up my talents for selling. so our approach is you approach the seller as if you're trying to sell him. You don't approach the seller like a buyer and you treat the seller with the utmost respect for what he's accomplished.

You keep the conversation levels at whatever his default is, whatever analogy he has. So the idea is to build a rapport very fast. Because after that, everything, all of the issues that come up fall back to that initial rapport and trust that you've built with the seller. The seller in this case was motivated to sell because, although he didn't disclose it to me initially, he had Parkinson's.

Jon Stoddard (16:30.621)
And he didn't, he had a son and a daughter and two son-in-laws in the business. And he didn't trust them as opposed to me when he compared, as opposed to me, he didn't trust them for protecting his investment. So that was his motivation. said he wants to, and I talked to him about the two-step retirement, which means that you're still involved because you have the note.

And you can't wait until the perfect opportunity because when you need the perfect opportunity, it might not be there. Yeah. And did you say something about like, well, what happens if I screw up the business and I can't pay the seller note? It just goes back to him. It goes back to him. Yeah. And well, and we also personally guaranteed it. If you're going to do a substantial seller's note, to give them more confidence, we personally, the entire family, personally guaranteed his note.

But our view was, you know, we had, we were at a point where we got it. We got all our capital invested. Yeah. So what are we left with if, if, if this thing, if this thing folds. Yeah. What did you, what did you think of brokers? You know, this was a good experience one, obviously, but did you always include them in the conversations or did you just tell them, Hey, you know, you're going to get paid. I need to talk to the owner.

You're going to get paid. need to talk to the owner. I'm going to develop the relationship with the owner. Yeah. And if we hit a hiccup in the road somehow, then you can step in and, and, and help keep the deal on track. But otherwise I'm going to talk, I'm dealing with the seller directly. Yeah. So this, James manufacturing, and then you create an offshoot from that James industrial. Those are still operating. Who's running those? we have, we have general managers general managers run that.

And we create business plans together and James manufacturing eventually I created what's good. I talk about it in the book. I create what I receive when I went to work for Cranko, I created what's called a rabbi trust. I think they have other names for it now. Yeah, but it's still, mean, if you go to Investopedia, had to look it up. So you go to Investopedia, they still have a name for it, but I think it's today's world. It's a little insensitive. yeah.

Jon Stoddard (18:57.441)
Right, so I went to the general manager at James at one point because he would periodically get off the rails and get upset and threaten to leave. he was crucial because he leaves, I'm back up in Corsicana again instead of down in Houston. And so I offered him 1 % a year based on equity in the company through the Rabbi Trust.

which is non-voting equity, kind of off balance sheet equity, and offered them 1 % a year over a 10 year, or up to 10 % based on providing results. And then when he finally retired, that we would convert that obligation, that liability, we would convert it into a retirement check, which we would pay out over 10 years. That first general manager is currently, he's in his fifth year on getting that payment.

So we did the same thing recently, two years ago, with the general manager of the James Industrial Contracting, which by the way is twice as big as James Manufacturing now. Wow, really? we tried a bunch of other things that I didn't write about in the book. Well, I did write some about, but we tried to get into the glass rack business and we were successful for a while.

We tried to get into the dumpster business for waste management. We were trying all sorts of things with the manufacturing company. And the one that I think probably four or five or six over a period of 10 years, and the one that really hit was this James Industrial Contracting. Yeah. You got went over to catering then.

back into kind of the food business, but it looks like you catering acquisitions, creative cuisine, catering, you got those going, acquisitions less than a million, but eventually close those down also. Why did it go back to food? That's kind of a, can't do food. just can't restaurants. Yeah. Yeah. What happened was as we were having problems with FreshMix, the first one we opened,

Jon Stoddard (21:17.965)
The problem was they were rebuilding the streets, the sewer system on the street in front of us, which I mentioned in the book, if we'd have done a better job of due diligence, we would have known that. We would have gone into city records and see what the planning commission was planning and seeing if there was going to be some construction problems. Construction problems destroy a retail business. yeah, they do. I don't care how good you are.

people aren't going to drive into a construction area. So that business was failing. The other two we had up and running were doing great. And the first one had been doing great. So I took my youngest son who was the rotating manager and I said, we got a, we got capacity now in this first business. I said, we got to fill this capacity. said, so I want you to start making sales calls on companies for catering.

So we're going to cater Mexican food to local industry. So he started and my youngest son, when you give him a sales assignment, he'll stick with the disciplines and he's having some success. Excuse me. And he came to me one day and he said, dad, he said, can't just sell Mexican food. He said, these guys want other products and we can't cook other products in this Mexican kitchen. So we have a problem. I said, you're absolutely right.

Let's look for a site that we can open up a catering operation where we can make anything. So we went and saw there was a catering company that was moving. I'm talking about corporate catering now. Julio's, was that Julio's? Yeah. That's not really the name, but that's what. So they were moving. And the realtor brought us there, and he shouldn't have since we were interested in catering business.

but he brought us there to see their operation and I couldn't believe it was manufacturing. It was manufacturing and it was, but it was, they turned everything over in a day. Everything happened in a day. And we got there about 10.30 in the morning and it was a very efficient, I mean, they had a very efficient flow. And this particular company did about 10 or 12 big orders, big orders for local companies, know, Exxon,

Jon Stoddard (23:40.905)
Shell, oil companies, law firms, and they took the employees from the kitchen and they turned about half of them into the driver. Because then you say, well, how does the food get to the sites? Well, they had vans. Their names on the vans and about 12 of the people from the kitchen went out and delivered all the products, set it up. You have to have setups and everything else. And so I'm impressed by this.

So I'm more now interested in catering than I was. And somewhere in there, someone says, there's about a mile away on the same street, there's a business catering business for sale. You never know how these things are gonna come up. So I sent my son down there, one of my sons down there, to visit with the owner to find out if that was true, that she wanted to her business. And it turned out she did, but she was...

And that's totally settled on it. But it was enough for me to schedule a meeting with her. And she was in a different type of catering. She was in what's called box lunches. So she was doing 55 or 60 orders a day. And there was a policy if you ordered by 10 a.m., that would guarantee between a 12 and one delivery. There was nobody else in the city doing it. And she was very successful and very disciplined.

over a period of time, several meetings, I talked, she wanted to get back into residential catering, parties. That's where she started and then it go on to box life. So we really got into catering to supplement the problem that was going on with our restaurants. And then catering, I don't know how much detail you want, but we grew the catering business 29 % the first year. Now that all becomes, that's all,

margin that goes to bottom line. I mean, all the fixed costs say the same. And we, this was just a cash machine. And from the cash we bought, we bought the property. Now we bought the property. Then we, from the cash, we, we used the cash in that, in our manufacturing and, and it continued, it continued to cash flow just like, like almost no other business for about a decade. Just so as, so as we went along, so now we've said, hey, let's, let's scale this up.

Jon Stoddard (26:06.445)
let's look at some other catering companies. And also it was a period of our revolution where in the beginning, the evolution was the analogy I used is my grandparents all came from Ireland, both sides. And I'm sure that their incentive for coming, they just said, there's no jobs here, where are the jobs? And somebody said, well, there are jobs over in the United States. So they got on a boat and they came, their total plan, their business plan was go to the United States.

And once they arrived, they figured out where are we going to live? What kind of jobs are we going to get? All of that was figured out after. That's the same thing with growing by acquisition. don't, another analogy is Apple didn't start off knowing they were going to do music. Amazon didn't start off for sure. They started off with books. Look at Amazon today. I mean, it's probably 90 % of the retail sales.

So you don't know, you have to get your toe in the water and then you're gonna grow and how fast you, how flexible you are, how intelligent you are, how much capital you have is where you go. So ours was first opportunity. And then we went to, wanna, we had one general manager, my oldest son at the catering company. I'm running the manufacturing company only because no one else in the family could run it. And

So now it's the idea was to make some acquisitions to get the other two sons jobs as general managers. So that's our revolution. Went through that for a while and that took us out. Yeah, so I was looking at this between 1993 and about 2010, all of your acquisitions were about under a million dollars. mean, and then you tell the lesson about this as soon as you start getting a bigger cash position.

buy bigger businesses.

Jon Stoddard (28:10.125)
I'm a blue collar acquisition guy. Yeah. So there's mom and pops, then there's blue collar, and then there's private equity. we saw, and blue collar goes from maybe 1 million in revenue to 5, maybe 10 million in revenue. And we saw the best return on investments at that low end range. So you could buy companies at that low end.

for two, the three multiple with very little risk, high cashflow, very little risk, very little working capital requirements. so that took less due diligence, less appetite for risk and more, almost a guaranteed cashflow. So that's why we stayed at the low end for so long. In addition, remember all of that restructuring we had to do from the initial failures.

of we had to get all that paid off. We were using the cash flows to pay that down. So we weren't generating a lot of excess cash. We were generating enough to do these small acquisitions because we never brought any outside investors in. And from then on, our model was always do 50 % equity, 50 % seller debt. So if we're doing a million dollar revenue business and it's generating somewhere in a neighborhood of

200,000 cash flow and we're gonna buy it for say five or $600,000. We gotta come up with the 250, 300,000 cash. And so we had, and we didn't borrow a lot beyond that. And so that's why we were in those ends. That's why we're at that low end. We still stay, we still are, we do not wanna get into the private equity. We don't have any outside investors. And so now we see the standard of private equity radar

You have to be down into our current model. I'm jumping ahead down around a three, 5 million to 20 million in revenue and 1 million to 3 million and what I call free cashflow. Yeah. Yeah. Then you, gotta, you jumped over to some opportunities, the carpets, the fashion floors. I just make a note, you know, each one of those businesses, whether it's a food supply or catering or manufacturing.

Jon Stoddard (30:36.927)
or franchises restaurant kind of deal is, you know, it's a different metric to make the bell ring. How did you acquire this knowledge to say, well, we know what to grow it as, like, we know what makes the bell ring? A couple of ways, you know, as you're going along with these, first of all, I love looking at businesses. Yeah. If I look at 10 businesses and we only do one, I don't view the other nine as a waste of time.

I am a voyeur. I love looking under the skirts. I love looking at the numbers. And generally speaking, there's a couple of for sure. One is generally speaking, whether it's manufacturing or it's retail or it's food, generally speaking, your gross margins run about the same. The gross margin on a healthy company.

the gross margins are somewhere around 50%. You can do a little research and see the comps for everybody else, for the well-run companies and poorly run companies and say, okay, this is what it gross margin. And it's generally about the same ratio, material and labor and burden. And manufacturing, you talk burden. And these other businesses, you don't talk burden, but the burden is still there. And if you haven't been in manufacturing, the idea of burden is your gross margin is after your variable cost.

So it's revenue minus material minus labor equals your variable cost. Then your expenses are your semi-variable and fixed costs. And when you subtract those out, you're at the pre-tax. Now in manufacturing, you take a big portion of those expenses and they become what's called burden. And so in the beginning of the year, you budget, and I learned this all the way back at my

first manufacturing company when I was an industrial engineer. In the beginning of the year, you budget a certain amount of hours, you budget a certain amount of spending, you divide the hours of the spending by the hours, and you get a burden rate cost per hour. So now you can estimate your cost. And typical burden rate is 2 and 1 half to three times your labor. So if your labor is 10, your burden rate is going to be 30%. And the material costs generally run about 20%.

Jon Stoddard (32:57.985)
What I'm trying to say is it's very common. in different, in different industries, like in our retail business, we don't think in terms of burden. We just think in terms of expenses. So we know we have to, we have to absorb a certain amount of expenses to get past the break even based on, but the higher your gross margin is, the lower your break even.

These, was going go back to that carpets come in fashion floors. got into that and got out. looked like, that just didn't work out. What was the reason for the, that selling that? So remember I said the evolution was, find each, find each son the job. So my son, Dan, number three son had left the partnership when we bought the catering first catering company, the partnership, because he had made a commitment to his wife, which I was unaware of.

When they got married, was, she's a dual citizenship, a dual citizen, US and Chilean. And he had made her a commitment that they would, they would go back to Chile. They go to, they would move to Chile. And so he can come in one day telling me with the two of them meeting with my wife and I, and tells me about this commitment. And so I went along with it they went back, they left the partnership. He left the partnership and his shares stayed at the same level. did. So as the other,

As the other partners, shares grew over time, his shares stayed at the same level. so he went to Chile for six years. When he came back from Chile, he worked in some.com businesses. remember the.com. my God. Yes. Yeah. Yeah. We got offered a million dollars for a pitch deck or just an idea one time at a trade show. Is that right? Remember the.com days. Yeah. Okay. So you remember. So he got in some.com businesses and it wasn't working.

Yeah. So we were out in LA. They came back to LA because the company she worked for, she ran the Chilean operation because she was bilingual. And the she worked for headquartered in Los Angeles. So they promoted her to Los Angeles. So they all moved back to Los Angeles. And so my wife and I are out there for her granddaughter's birthday. He walks in, just lost a second job.

Jon Stoddard (35:16.661)
I said, why don't you come back in the partnership? I said, he said, yeah, I'd like that. And so I gave him exactly, I said, I'll give you 500 bucks a week. You hire a couple of brokers and you go find a catering company. Cause I said, we know catering. And so we went at it and we found a catering company. I'm not gonna bore you with the whole story, but we got right down to the final strokes, letter of intent.

doing our due diligence. And I say, if we find something irregular, our motto is we tell the sellers upfront that we're not going to renegotiate. So, you know, be honest with us before we get to the letter of credit, before we get into the detail due diligence, because if we find something that you should have told us or you should have known about and didn't tell us, we're not going to renegotiate. We're going to walk. And is this like kind of a stern warning that you look face to face and the person and just go, hey, look,

One last thing I need you to say. Yeah, it is. And for two reasons. The positive reason is is if he's got something he hasn't told us yet, he's going to then reveal it. Yep. The second thing, and because because we're going to get into a letter of intent, we're going to start doing the hard work. What I call the the due diligence at that point, we're going to do the real due diligence and the hard work. And it's going to take us three or four weeks. And I don't want to waste my time if he's got the. Here's the second reason, though.

The second reason is I get to tell him about, look, you're going to have private equity sniffing around here. And I said, let me tell you how they operate. They come in with one price, and that's not the price they're going to pay. They know every company has problems. And when they get into due diligence, they're going to keep bringing these problems back. And every time they bring back a problem, they're going to reduce the price. So we're not reducing. We know you're going to have problems. And as long as they're not substantial,

We're not coming back and renegotiating the price. We're going to either buy it at the price in a letter of intent or we're walking. So it's a warning about private equity too, because that's what they do. Yeah, yeah. I've had that experience. Yeah. OK, well, and I'm sure there are people who are listening here who are private equity and don't like to hear that. Yeah, I don't like to hear that, it was like, hey, well, we do do that. So it's the same thing with general contractors. And I have a rule with my sons, never trust a general contractor.

Jon Stoddard (37:39.383)
when a general contractor bids a job, they have very little margin in the job because their attitude is they're gonna pick up all their margin on the change orders. Nobody writes a perfect spec. So now you're out on the job, you're starting to do, they say, well, wait a minute, where's the grass? shit, we didn't put the grass in the documents. Yeah, well, and now you get, instead of getting your 5 % margin on a job, you're getting 40 % on the grass. These are just things that come along,

like shells on a ship, you just collect these things, you go along the water. If you're paying any attention at all, and you shouldn't be doing acquiring by acquisition if you're not enjoying it and paying attention. So how did you learn? These barnacles just collect. So in 2010, you launched Shanahan Train LLC, and that was a pretty nice run, it looks like, as you acquired

CPR experts, Delios, emergency medical training, heart techs, vantage training, vital signs training, Liberty emergency services. That was a pretty nice run it looks like. Right. So the company we bought for son number three, when he came back into the partnership, when the first deal didn't work out, I said, have you gotten anything else? I'm out here now. If you got something else I can look at. And he says, yeah, there's a training company. He said, I like the training company.

I like that I preferred the catering because you guys have all the knowledge about this training company looks great. I said, well, make up make an appointment. So this is in the morning. We're having coffee together, the three of us. And he makes an appointment. We get an appointment in the afternoon. Turns out to be our firm. It's what's called CPR and advanced cardiac life support training, which if you were in the medical field, any type of medical and dentists, doctors, nurses, if you're in the medical field,

You cannot practice without an up-to-date American Heart Association certification for CPR training. So it's mandated training. This is the model. It's mandated training every two years. It's like razor blades. They gotta come back two years later. And it's a negative working capital model. They pay in advance. you have, it's actually a negative working capital as opposed to

Jon Stoddard (40:06.901)
you needing work. As your sales grow, it throws off cash. Yeah, but it's retained earnings though because you haven't delivered the training yet, sometimes pre-booked, right? Exactly. So we bought the company and Dan became the manager out there. And the seller, in our model, we always try to make sure we have chemistry when we're looking at a deal.

because we want to be involved with that seller the rest of our lives. Yeah, you you get you go to them and meet them. You just don't do it over the phone. I understand it like Warren Buffett sends somebody a letter. Send me your books. I'll send you a letter. Right. But we want not only going we.

dance. Yeah, we want to feel good about that because these are people we're going to be involved with for a long time. And you don't have to be involved with people you don't like when there's so many opportunities. So we have to feel good about that. We have to trust them. They have to trust us. So there was this energetic, charismatic, enthused guy that was selling this business. His name was Armando. And everything I'd asked for was instant. was it. He'd grab it or he would have the book.

Administrator grab it and Armando was, Armando was excited about life. I mean, he was just a great guy. So I became like a father to him. He was in his early thirties and I maintained contact with him after we bought them and he wanted, he said he wanted to be an attorney. He was selling because he was going to become an attorney. That was his reason because he's a young guy. I'm saying, why are you selling? So we, we stayed in touch constantly, but once every three months we're talking.

And Armando's always saying to me, when are we gonna do something? And I said, well, whenever you're ready Armando, we'll fund it. You'll run it, we'll do something. So these calls happened over several years. Finally I get a call and he had a guy that he had worked with that he says, hey, this guy's looking to do something and he knows this training business. So I bring that guy into Houston and I thought this

Jon Stoddard (42:16.685)
my training model was great, but we didn't have anybody to scale it. And we didn't have anybody to have the contacts to find the businesses. knew that it was a fragmented industry, I didn't have the, he had a lot of the contacts. So I put together a deal with this guy, I put a business plan together. Over 10 years or eight years, we were gonna acquire 10 businesses and we were gonna put a million equity in the deal.

And after three and a million available financing, we'd have a million available financing plus a million equity. He comes in with no investment and over a period of years, he would earn 20 % through sweat equity. And we'd go out and make these 10 acquisitions. And that was the start of our training companies and scaled up. we wound up with a total, you see you've just added, wound up with a total of

10 companies, including Bolt-ons. A Bolt-on would be where we would just buy a smaller company and attach it to the original company and use the original company's back office. Yeah. the margins, it was another printing press for cash. And this gives me a chance to just segue into something. During this period of time, when we're throwing off all this cash, and this guy, by the way, we paid him very well. When I'm talking about cash flow, he was the highest paid guy in our company.

When I'm talking about cashflow, I'm talking about after his payment. And plus he's earning, he earned this 20 % in five years. He's now a 20 % owner of this subsidiary and we're 80 % owners. Which is Shanahan Training LLC, a separate LLC. So we're spitting out a lot of cash and the cash is sitting in the operating account. And some of your listeners will grasp this.

This cash is sitting in all these various companies operating accounts, idle, earning nothing. Now, inflation at the time, you we haven't seen inflation like we're having now since the... Yeah, Carter, 1981. Yeah. 1981, was 20%. And so we're, and I think we're going to see that again. So meanwhile, this money sitting in the bank at 3%, but your inflation, so you're still losing 3%.

Jon Stoddard (44:41.739)
And I decided that we needed to open up an investment account. We needed to create another leg to put money in his investment account. The idea originally was sweep all the cash out of the operating companies, put it in the investment account, earn some money. And we weren't really thinking about buying stock. We were thinking about more fixed investments, bonds and things, and leave it there until we had a next acquisition.

then pull the cash out, make the next acquisition. So it was a parking place. Well, the cash was coming off so fast. And we went from in the beginning, had a lot of people and not very much cash of capital. And now suddenly we got a lot of capital and we don't have the talent to employ it. So that capital's building up and I decided that, wait a minute, this is another investment arm, which is the Warren Buffett. mean, we're such.

micro Warren Buffett, but that's what Warren Buffett does. He's got 360 million invested in other stocks. So we started taking that excess cash flow and we put it into the market. so now that excess, the cash that we have sitting in the investment account is not a parking place, it's a business. That's one of our legs. So getting back to your, so we,

We wind up after we, it's over eight years, we accomplished our business plan to a Cuy of Tennessee's company. The plan originally was to pause, reflect on it, and then do another 10 with having an assistant for the guy we had running that business. Cause he was doing it, he was doing it all alone. Yeah, he was out there making the acquisitions and just making happen. Yeah. Making it happen, results.

And we had a, and we're very decentralized. And I wrote a paper that's not in the, in that book, but I have a paper now, which if you'd like, I'd send it to you on centralization versus decentralization and the risks. What risks you take if you're centralized, what risks you take if you're decentralized. We set up all our operating companies. very, we're decentralized. So all those training companies were decentralized. Every one of the managers ran it like it was his own business.

Jon Stoddard (47:02.081)
They have their own check. All of it, all the cash is out there. They write the checks. We're in the background as, as a soft investors and we just take the cash roll. Let let me ask you, did you ever get together occasionally and kind of cross pollinate or share best practices, ideas and say, how can we, Hey, we're making revenue doing this. Like, that this, this other group adds that idea. We did it, but not as well as we should have done. Not nearly as well as we should have. It was part of the.

problem that we have with the guy running the business. The level when we got to 10, he started to have some health issues. He started to have some stress issues. So some of these good creative ideas, like you just talked about, weren't getting implemented. And so eventually he wanted to sell. He wanted us to sell that. Now, I should mention that we buy forever. We're not intending to sell anything. We're intending to grow this.

I have, I got my sons, then we got the grandchildren, but this is supposed to go on forever. And so we're not, so he, he wanted to sell long story. I won't go through the story. And eventually I agreed to sell for a book. the way, it's in the book. And mean, he was reaching out to private equity firms without your knowledge. It's in the book. so, so we did sell. And by the way, we sold, we sold in June of 20.

when I think the market hit bottom in about April 20. So we were able to put all that money to work in that third leg, that leg, that investment leg at really good prices. And then we turned that, we turned all that around and we created a new scaling, which is the, we're up to, we're up to four locations now, three businesses, one of which is not on that chart I gave you, because we didn't, acquired them after the book was.

We acquired them May 3rd. So we closed on a transaction for a $12 million revenue business on May 3rd, bought the property also in Florida. So we now have three golf cart sales, service, rental companies. Let me go back to the training business because it's all about CPR and face-to-face training. Did COVID kill it after you

Jon Stoddard (49:28.717)
Because people had to send people to locations for training. Right. It didn't kill it. we also had, that was the original bullseye was the CPR mandated. We increased the bullseye as we went along by opportunity and acquired similar businesses. So the first similar business we acquired was a vocational school for nursing vocational. So we acquired a vocational school. The second one we acquired

and the bull, which is slightly outside the bullseye, was EMTS and medic training. And so there was very little COVID effect. was not what you would, not what you would think of. Cause they remember they had to, they had to have their cards. They couldn't, if their card was expiring, they had to have their card. So you got into

You bought a couple other flooring businesses. You closed, closed flooring, manorial. Then you made a big jump to golf carts, which is this, these big, bigger businesses acquisitions. Right. Which we did after we did, after we sold the training businesses, because now we had a lot of cash and we had, we knew how to scale. We had learned how to scale. that became our scale. Just, just let me back up on the flooring.

because I haven't explained it. in the book, but I haven't explained it. The flooring was, remember I accommodated my number three son. So now my number two, my number four son walks in with his wife on a Sunday morning and they want to move to Austin. And I said, well, you your job is here. Yeah, but we want to move to Austin, cetera. And when I'm resisting, you know, I get the final.

needle was we did it for Dan. I think I gotta tell you James people are gonna say well how do I become a son of James? Well I can tell you that family was always first. Yeah. In everything we did family was always first and I also say that you get rewarded or punished in the last third of your life for what you did in your first two-thirds. I'm definitely in my last third and so I and I feel good.

Jon Stoddard (51:48.801)
You know, I think I might not look as good as I feel, but I feel good because I, you know, I, I, I put family first over everything. So I accommodated, my sons and I, so this, wants to move to us. I said, okay. When he threw the Dan thing at me, I said, okay, I'll make you the same deal as Dan 500 bucks a week. You go over to Austin, get a broker, find a business. the business he found was flooring. That's how we got into floor.

And it was a good and same model again, you're it's it's like a contracting business. You have material and labor and good margins. It's a you know, every there's a I say every seven years people change their flooring. Yeah, it's like beds or two like mattresses and stuff. Yeah, you just follow the housing and you're following that. So it's a great so we then acquired another

And then we were gonna roll it out over here in Houston. And it's a long story in the book about why we didn't roll it out. We eventually sold the Austin to the number three son, number four son. He's a lot like me and he doesn't like authority. And so I'm an authority figure. So to accommodate that situation, I said, you're gonna accept this authority at the bit.

you're going to accept this bit or you're going to just become a salesman. Yeah. anybody that's not knowing what he's talking about, he's talking about horse bits. Right. Okay. I said, or you're just going to become a salesman. We don't have any other job for you. I said, I'll give you one other option so you don't feel trapped. I said, we'll sell you the business and we'll finance it. We'll sell you the business and we'll find, he took that last option. He bought the business. We financed it. We financed it because he sold.

some of his shares back to the partnership and we took that money to finance them and he eventually sold and he made money on the sale and now he's doing properties and some other things. He's still not back in the partnership. And we haven't invited him back to the partnership. So he's inactive, the eldest son is inactive. I got two active partners, which is the number two and three. They're running things.

Jon Stoddard (54:08.875)
Yeah, would you say it's difficult to have, you know, your son so involved in, know, your personal life and your business life and and that relationship? Yeah, there's a whole section in the book about what complications family businesses have. And if you're not willing, if you're not willing to work with those companies with those complications, then you shouldn't do it. And one and one of the complications that we I believe I saw ahead of time and headed off is we had.

Two issues when we formed a partnership. One, no wives, no wives in the business. Two, buy sell agreements. Everybody, so nobody could feel trapped. If you're in the business and you don't like the authority or the rules, we'll buy you out. Make us an argument. Market price, whatever the valuation is. And nobody has exercised a buy sell. They did exercise, hey, we could use some cash right now as opposed to getting cash later.

And, and we'll, we're willing to, sell the, equity back to the partnership to get this cash now. So two of the sons took, some cash out. Do you recommend, let's say some of your sons don't have the entrepreneurial chops that you do. Do you recommend like, Hey, I need you to go to this six months training class or three week training class or read this guy or, or suggest they get into masterminds or things like that? Yeah. Two things I said.

I sent the partner we bought out, one that was in the training, I sent him and my son Dan and my son Mike. I'm the general partner. So the general partner has total control over the capital. So they're in my will, the three of those guys were in my will that when I pass, the general partnership goes to those three guys, a third. the general partner has 1%. So they each wind up with a.

33 and a third percent. they would now have the decisions, but it would take two or three votes. And one of those votes was gonna be the outside guy. He's no longer, now it's the two votes on my two sons. And as part of that, I gifted away the final remaining shares I had in 2015. So I only have the 1 % general partner.

Jon Stoddard (56:32.045)
Nobody has to kiss my ring. Everybody there. They're the owners of the business. And no, no wives. I sell agreement and I sent them all. I sent these three guys to a school in Chicago run by a Canadian. I forget the guy's name. It's all about delegation because I had, you know, I had gotten where I was at. I pointed that out to him by delegating everything to those guys. Now, in addition, in the back of this book,

There's a thing called business essays, which were really papers that I wrote over the years, which were instructions when we run into something and my sons needed more training to clarify in my own head, I would document what I was trying to teach. Yeah. These are like constitutions. Like have you ever gotten trouble? Just go back to the constitution. back to the rules. Yeah. That was so there and they're going to find some, things in there and 10 years from now that will be valuable, valuable to them.

then that aren't valuable now.

If you set the structure up right and you train and be willing to delegate, I'm sure you have children to jam. Yeah, I got twins boy and a girl. Yeah, and and and sometimes they look pretty stupid, but you we forget how stupid we were at certain points in my life. And and so I'm I'm willing. I learned early that you gotta you gotta see them the way you were then and be willing to delegate on that basis.

You can't be delegating. Yeah, I like looking from the outside. I'd say, man, you're to your sons. How lucky you are to have a mentor right next to you like that. And how lucky I was to have these four guys who were 100 percent. I mean, you can't have anybody more loyal than these guys. There's no there's no castles treachery. There's there's no backstabbing. There's this is.

Jon Stoddard (58:35.595)
This is the way small businesses should be. And these guys were equally loyal to each other. My sons, early in the, when we started to accrue some cash, we used to have at that ski place we had, we would have our annual partnered meeting. And one of the things that came up in one of the first meetings was I said, look, we've been accruing cash. Here's our situation on the cash. I said, we can pay dividends.

if you like. And I said, I'll leave it up to you. And if you vote for the dividends, we'll pay dividends. I said, here's what's going to happen with dividends. The dividends, you're going to have your wife is going to probably spend it all and buy things you don't need. But even if you don't have that happen, let's say you're smart enough that you invest it. You're going to invest. We're making 25 % return on investment. You're going to take after tax money.

And are you going to be able to earn 25 % somewhere else with that after-tax money? they all agree. Charlie Munger on one shoulder and Warren Buffett on the other talking. That's my mentors. So they said, no dividend. So we have never paid a dividend. 30 years, we've never paid it. All the money has been reinvested. Yeah. paid a dividend. they've never come to me. I never had one son come to me and say, hey, I need a raise.

I, know, you know, why can't I take some money out or never has never happened. I mean, so I'm at the other side. I'm lucky to have had these guys. These are these are good. These are good guys. They were my wife was the time until she passed away early. It's the most unselfish woman I've ever met. And they they all they all picked up this character, these character traits from their mother. And I've been training them on business and mixing that in and

that so we're both lucky. Yeah, that's fantastic. I want to kind of answer some ask you some kind of personal questions like I mean, is there any kind of business or opportunities you will turn down now? I mean, let's say right now you've got a number of operating businesses, you definitely like the golf carts business, but is there any kind of opportunities you do turn down just like no right out of the bat? Yeah, if it's a dirty business, gambling, well,

Jon Stoddard (01:01:03.533)
payoffs, know, got a collection or anything like that. No, I mean, you know, there are a lot of in contracting businesses, you know, there's a lot of guys getting money to be favored. We won't touch. We don't do any cash business. We buy some businesses that have cash, whether whether, you know, and it's not going across the book and we immediately put it through the books. We don't do anything to reduce our taxes. We have we have a

statement we say we rather overpay our taxes and sleep at night. So we don't nothing dirty anything that's and there are a lot of dirty businesses out there so won't touch a dirty business. Yeah, this is my personal question. You mentioned, why did you move everything to QuickBooks? You know, you talked about Sage, you talked about Great Plains, but why did you like QuickBooks so much? By the way, I worked for Intuit for five years. So I like QuickBooks too. Yeah. All right. So when I bought the well, when we started the franchise,

We hired an outside bookkeeper who was an accounting firm and he used QuickBooks. Prior to that, I had no knowledge about QuickBooks. I worked in big companies, huge companies. Yeah, they don't use QuickBooks. It's for SMBs. So this guy used QuickBooks. So we adopted QuickBooks from that. And then when I bought the manufacturing company, they were using Peachtree.

It was an accountant we had at the catering company. And she, so we started using QuickBooks Catering Company. So I, and her husband, well, it was her husband at the time, he was a CPA and she said he could install QuickBooks for us at James. So I brought him to install QuickBooks because Peachtree was a back system. It wasn't user friendly. So we've been QuickBooks ever since.

And we've never had anything too large for QuickBooks. Now our recent acquisitions in the retail business, because there's a lot of what they call point of sale business in retail. That's for golf businesses, yeah. Right. we've, we use whatever software they're currently operating under this point of sale. We use that. All right. So we're using, we're using on two acquisitions ago, we're using Sage, one acquisition ago. mean, the one we just acquired is using Sage.

Jon Stoddard (01:03:26.913)
We just updated and modernized it. If you've ever heard of Sage. Yeah, yeah, I do know Sage. Also, the papers are what I give my sons. You asked about the question. So I send them to seminars that I think apply. I give them these papers and I tell them. I have an expression. say I tell them, I tell them what I told them and I tell them again and then I audit.

And then I tell them, I tell them what I told them and I tell them again, and then I audit. Now today, I audit, I ask questions, I always sign to distinguish what role I have on, what hat I'm wearing. If I'm just giving advice, I sign it Coach Jim. don't have to, don't, Coach Jim means you don't have to do it if you don't want, I'm coaching you. If I write Jim Shannon General Partner, now that's an order, but they're very seldom.

I do that now, it's 99 % Coach Jim. So if Coach Jim might say, look, you need to read this book. You need to read The Accidental Entrepreneur and you need to keep it on your shelf because in the back of that book is gonna be a reference document for all times. And I keep putting those papers out. I put two papers out this week. One was on the moat, know what Warren Buffett calls them. I wrote a paper on centralization and decentralization.

I continue to write the papers. And there are a lot more papers that I didn't include in that book. So that's the education, the continuing education for this. By the way, I'm constantly reading myself. I'm being continually educated myself. And I'm mentoring people. There's a guy that got on LinkedIn and wrote a review I saw, and he says he knows you from a couple of years. He went to some class with you.

And he's in Lithuania. I'm mentoring two guys in Lithuania. One is the one they and they both are from Israel. One immigrated to Israel from the Ukraine and the other immigrated to Israel from Russia and their partners now. And I'm mentoring them. I have a call every week, a Zoom call with them. I'm not kidding. What was his name? Maxim Maxim Gromman, Maxim Gromman and Nikita, the second other guy. But Maxim says, you know, I told him about this call. He said, I know, John. He said, I was I said, how do you know him?

Jon Stoddard (01:05:48.653)
He said, I went to a class with him. said, do you know him from the LinkedIn business? And he said, no, I went to a class with him. wow. OK, I got to look that up. And he put a review on the LinkedIn thing, you where you had your review. Yeah, beautiful. I honestly, I really feel that you're a knowledgeable guy. And I really got excited about the positive review. I want to thank you for that. Yeah, I mean, it's

Out of all the books I've read, mean, some of them are instructional, but this is so detailed about each specific acquisition, like what you went through, where you found it, what you offered them, how much you paid, what the deal stack looked like, the problems that happened after you integrated it, sold, operating, or closed.

All of that is in 27, 28 different businesses. And I don't think I've read a book like that before. So I love it. Yeah. Okay, great. I wrote a book before this called the Finding the Angle, but I wrote that book primarily for my grandchildren. But in it, you know, when you write, I don't know how much writing you do probably a lot, but you discover, which I discovered most of the stuff I've discovered late in life. When I talk to these two guys, I'm mentoring in Lithuania.

I say to them, honestly, I just envy you guys. They're both in their late 20s and they're learning things that I didn't learn until I was in my 60s. I know, I see that too. go, man, see these kids. And do I envy you guys? So I'm still learning things and it's amazing how much more you can learn. as I said, I'm a voyeur on businesses. love looking and that's one of the reasons I like looking at your podcast.

somebody's in there talking about their business. But as I mentioned to you when we first talked, that often you'll ask them a question about something about the actual, how did it come out? What happened? And it stays too broad. doesn't. So I deliberately made the second book. I knew that there wasn't a book out there that I could see that went into the detail. and if you follow the things I've laid out, anybody can do it.

Jon Stoddard (01:08:10.529)
that is willing to willing to willing to first of all, put some money in and then secondly, understand a little accounting and then third to be disciplined and consistent. Yeah, yeah. And we all we try to do is hit singles and doubles. We're not trying to and we've never had a home run and don't and are trying to hit home run singles and doubles. I made a post about that just a couple of weeks ago, like most of the major league baseball hits are singles and doubles and you move the base around. You know, I've never had the ability like hit a home run and just

out of the park, it's just singles and doubles. Yeah. Well, James, man, I really appreciate this. I really appreciate that. We are already past an hour. I want to just thank you so much for your time talking about your book. Everybody get on Amazon. It's pre-order. It's accidental entrepreneur, practical guide to financial freedom through successful business acquisitions. Yes. And they can also get on

What's it called? Good Books? Good Reads or Good Books? Yeah. No, there's a, it's the publishing company that Amazon uses and know that. I don't know what it is. Yeah. I can't, I'm sorry. I don't have the name, but not much on promoting, I guess. So when will, when will this podcast be available to see? It's going to be available in the next 24 hours. Really? That fast? Yeah. Yeah. Yeah.

I'm a little bit behind. got behind on some projects. So I got to get this podcast out. Well, I'm impressed with the way you schedule things that you throw that schedule up there and bam. then when it's time to get off, you're getting off. I'm not going to hold you up any longer. Again, this is one of those instances. I hope we become friends. And I think this is the start of a friendship. Because I like what you do. And I like the way you do it.

thank you so much. I learned so much from you just from your book and getting an hour with you. So thank you so much. Thank you, John. All right. Take care.