Andy Harbut
@andyharbut
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STL rehabber. Insurance due diligence for PE, SMB since 2005. “I insured Twinkies!”
St Louis, MO
Joined July 2019
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@bavedikian
Didn’t realize you rented from me…
Personally, I do keep my rents affordable so I can give back to younger people. If I didn’t have cheap rent when I was 22,23 and 24, I wouldn’t (a) have had nearly as much fun in NYC and (b) be rich today.
We’re not all in it for an outsized
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@rosaticorp
That’s wild!
Seems like a lot of work, when all they really need to do is set up a super pac and tell people they are calling from the “Donald Trump Appeal for America” fund….
(Scratching head…)
Guess I know what I’m doing this afternoon.
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@KHendersonCo
After being a progressive income tax guy for 35 years, I had the realization last year that the tax code is so broken the only way to fix it is with flat taxes. I do think a progressive tax with no system for deductions could be reasonable, but would be harder to convince the
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@bavedikian
Do be fair (I don’t want to act like I’m some kind of robinhood of real estate) I do have a w-2 job that allows me to subsidize the rents a bit. Ie, I’m happy enough to let the folks living in the house buy me the house. I could probably be making maybe 20 percent a month more
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@SMB_Attorney
I’ve been thinking about this a lot lately, myself. It conceptually ties well with Arnold’s proselytizing the importance of having a vision (“Be Useful” is a great read). Once the vision is clear, pursue it relentlessly and steer clear of distractions.
Thx for posting.
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I had a guy today tell me they would take 4x revenue of $1.5m on a business that maybe has a 25% ebitda margin. (Of course, their alternative is strategic PE backed buyer).
These prices are redonkulous.
It doesn’t even make sense when you include multiple arbitrage. It’s
Update: What I thought was $600k of SDE, the broker turned into $900k of SDE vía add backs (keep in mind, this is ignoring the salaries for multiple owners who will need to be replaced). I heard it is under LOI for more than $8m now. This is around 3x revenue. 👀
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I’m reviewing the insurance program for a PE owned company. PE firm bought the company last year. A top five insurance broker did the pre-close diligence, but didn’t take over as broker post-close. I’ve read their DD report. The portfolio company maintained its pre-close broker
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Message to anyone selling their business.
If you vomit files into the data room without consideration for how they are organized or whether they actually respond to the questions being asked, you come across as a very sloppy operator.
Either hire a good broker
@SMBJackieHirsch
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Happened again today - SMB ETA client bought a business, where the contract with its third largest customer requires a fidelity bond (aka employee theft coverage of customer assets) and the company does not purchase the required insurance (or does it? To be continued on that
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@Bradleyflowers7
The roofing thing is nuts. Do people even pay for roofs out of pocket anymore?
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More positively, here’s me hitting 245x2 (after a whole lot of 225x8) on the way to 300 lbs courtesy of the hat from
@ClintFiore
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Finally, my dream of being an insurance man solely for the purpose of getting onto an MLB field has come true. (It was cold. And windy.)
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I genuinely do not remember how we placed property insurance before google street view….🤣
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@Eli_Albrecht
Good advice. One other consideration - as reps and warranties insurance increasingly creeps into the LMM (eg, we’re using RWI on $15M EV deals), the legal memo must also satisfy the RWI underwriter’s need to see adequate DD as conducted to avoid policy exclusions.
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If I ask you for a copy of your LOI, please trust that it’s not because I am trying to nefariously garner proprietary information to benefit myself.
It’s because I need to understand the deal to do my job right!
What matters? Well, there’s the stuff that’s specific to your
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@DrewOden
To the “more expensive” lady, I’d respond, “cool, that’s so great to hear. I don’t often find women with their own money who can keep up with my lifestyle…”
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Similar story:
When I worked at Big Insurance (is that a term? If not, I am coining it now), a friend of mine was a reps and warranties insurance broker. We were working on a deal together. (I am by training, and at heart, a diligence guy.)
My friend sent an RFQ to underwriters
As I get ready for the weekend, I’m reminded of one of my favorite BigLaw stories.
I was working on a go private deal (a PE fund buying a public company and taking it private again).
We were running like a well oiled machine, because that’s what we did.
So I was surprised to
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@SMB_Attorney
@SMB_ash
I wore my 2022 SMBash hat to the Holi festival in Jaipur. It’s now ruined, so I’m coming next week, but just for a hat.
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Talking with a client today. He runs a Holdco with five operating businesses.
I'm reminded that a big, big part of our job as insurance broker is to fulfill the "outsourced risk manager" role.
What's that mean? Consolidating information, tying out insurance premiums to
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I missed him
@SMB_ash
, but
@ElliottEHolland
was with me this week when I had the biggest win of my year.
On the call that “closed” the sale (on short notice at six pm on a Tuesday, because that’s how these things go) I happened to be wearing my Guardian Due Diligence T shirt.
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It's my favorite time of year!
I'll be at SMBash next month in SLC. I relish re-connecting with my peers in the SMB community, learning from the great operators and advisors in attendance and making new friends.
Every year, I return home feeling revitalized, energized and
Every year at SMBash we try to find speakers who will give our guests the KNOWLEDGE that they need to EMBARK on or continue their entrepreneurial JOURNEY with every tool in their tool box.
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@GuyDealership
To my eyes, it starts to make the massive cost of government investment in mass transit seem reasonable.
If the folks who can afford insurance ultimately bear the loss and costs of the uninsured, then we’re socializing the costs of transportation, anyway.
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On the topic of LinkedIn profile descriptions..
A thing I see often is a headline that reads “I help xzy firms with YYYZ problems…”
My issue with this style is that there are all kinds of yahoos making redonkulous claims in their linked profiles that are far more aspirational
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@SpiritofPines
@mhprvpmvp
Guilty as charged. I’m basically an adult child that can’t be trusted with fine jewelry. So yeah, I wear a three dollar silicone deal. Came in a five pack. I’m on black until I destroy this one, like the last two.
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Twenty nine years ago, my dad left me alone for two months over the summer while he went to Africa to run the United Nations / IRC emergency medical clinic for Rwandan refugees in Zaire.
Today, I go to happy hour with underwriters from Midwestern Employers Casualty.
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@ChandlerReedSMB
I’m going to throw out a different take, one that I didn’t appreciate 20 years ago.
What’s an interest rate, anyway? It’s a combination of risk charge (to account fo default) and inflationary expectations. Now, a bunch of people got really lucky when inflation was consistently
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Usually, I tweet about insurance stuff and general nothingness, but today I'm going to tweet about one of the situations I've run into as a landlord that kind of challenged me as a person.
I acquired a duplex in 2020. One side had been continuously occupied by a group of
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Here is a work related tweet.
A surety bond is a performance guarantee of sorts that is underwritten as a form of credit. Surety underwriters underwrite to all zero percent loss ratio, meaning, they really do not want to take risks. That’s why the cost of the surety credit
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Bruce makes me want to be a lender because his mastery of deal structure and corporate finance is just so impressive.
When someone does something so well, it inspires you to want to be like them… that’s Bruce.
I have heard from searchers that an intake call with
@sbabmarks
is also an education on their deal. When clients come to me after an intake call with Bruce they understand whether their deal pencils, the risk factors, and many other things.
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One of the reasons I embrace friendships with people I don’t agree with all the time is to remind me that other people look at the world differently than I do, and that’s shaped by their experiences which are often completely different than mine.
But, if we get into a
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This is going to sound cynical, but I think some professional services firms, consultants, etc., when they get to a certain “enterprise” size, they just make up products and services they think they can sell for insanely high margins. I have seen this many times. Sometimes the
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@SMB_Attorney
Yep.
If you think about the tax code for what it really is - a bunch of insentives and dis-incentives to control behavior - it seems evident to me that government is mostly ‘pro business’, but not ‘pro small business / entrepreneurship’.
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@ClintFiore
I’ll give a serious answer (since I know what you meant by the question).
Iacocca: an Autobiograph. While I remember thinking he was a blowhard in the eighties, Lee’s candor, humility and pragmatism are damn right quaint by today’s standards. Principled, but not a slave to his
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Wife went to Vanderbilt. She was thrilled to find “Vandy” ciders.
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@SullyBusiness
One of the things I do to relax is wonder the aisles of Home Depot and Lowe’s. IMHO same situation - lot of deeply discounted goods.
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Just heard an interesting take on forced return to office at an employer that relies on a geographic mix of employees, some remote and some attached to physical offices.
The folks that are within 50 miles of the office, now mandated to go in four days a week, hate it. (They
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I sometimes wonder what I would be doing if I didn’t have calls and meetings scheduled all day. I bet I could get a lot done.
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@robbezdjian
@unusual_whales
One of the things I actually remember from business school was a chart of stock price performance leading up to the announcement of an acquisition. Yes, it looks exactly like you’d think it would.
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“Yes, this is a get rich quick scheme. Life is too short to get rich slow.” - Tom Vu
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Sometimes, I think of myself as an AI enabled computer. I happen to have been deployed in insurance / M&A stuff for twenty years, and through machine learning across a large and diverse training set of deals, have become adroit at solving certain problems that occur regularly
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This is the kind of story I use to defend insurance companies when they are attacked as malignant agents of capitalism and greed….turns out they are a safe haven for folks that probably couldn’t find other work and would otherwise fall through the cracks.
Actual Conversation That Just Happened
Carrier: We need you to download this form and fax it to us.
Me: I cant believe you guys are still using fax
Carrier: (kind of in a scolding tone) Yes since the form has your confidential information fax is the most secure way to send
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The thing that’s so phenomenally frustrating about working for someone else is taking your truth and burying it.
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Don’t fly southwest often. I am today. My buddy sprung for an “A” boarding spot to us, something I normally wouldn’t do.
I am now in the position of making myself look “undesirable to sit next to.”
Any suggestions?
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@Bradleyflowers7
Don’t get me started on roofers that 1099 all their employees to save on comp costs….
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@SMB_Attorney
As a guy who has regularly received email comments from big law associates on deals for twenty years at all hours, I can honestly say that half the time I feel like I’m on the receiving end of unnecessary busy work by a much of people who don’t really know what they are doing.
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What it’s like to be the smartest kid in the slow class (at insurance school). A thread.
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It drives me crazy when people start an email with "Hey Andy," and I just figured out why.
Are they saying "HEEEEEYYY," like they want to party? That's cool, I'm down.
Is it "hey," flat in pitch and intoned like a sad sack. Wow, way to make me not want to call you back.
Or,
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Good fiscal, economic and monetary policy (and capital allocation!) does not see left/right, blue/red.
@LukeTurner_CFP
can you make a play to manage the city’s cash surplus?
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The new iPhone feature where I can accidentally pick up when a person is leaving a voicemail is straight up scary and dangerous.
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I’ve always wondered, could you cross train customs and immigration workers at the airport, and just make that one stop? Why the separation? Anyone know what I’m missing?
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@imjohnrogers
@mkobach
You named two of my favorites - Cinncy and Tampa. Both have strong local governments that seemingly understand how government and business interests can work together constructively and synergistically.
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I worked at a bar in college. Initially, I started as a bar back. (Actually, that's not true. I told them I could cook, which wasn't true at all. As soon as they figured out I couldn't cook a PB&J, they figured maybe they could use me in some other capacity...)
I didn't know
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Talked to a middle market PE friend today. She’s submitted seven LOI’s in five months and has not gotten a single deal signed up!
Oof :(
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@rafaquinn
@HowardMarksBook
This is great and something I’ve not seen before.
My biggest take away from business school (aside from “M&A doesn’t usually work” to create economic value) is that valuation is nothing more than discounting expected future cash flows to PV based on risk. So, whenever I’m
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@shawngorham
Codie Sanchez went to ASU so I know she’s a genius. (Need to check the dates but I may have been her TA for undergrad Fin 300. That would make her even more smarterer).
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@KenjiCapital
Sacrificed living in manhattan for Brooklyn. Lot of time spent on the F train. But, that was just more time to read.
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Other people who work in the insurance industry look at M&A diligence as completing a report. I do not. That’s why I am so good at it and why it is is harder for me than other people. I guess you get what you pay for.
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Am I the only person who thinks it’s nuts that as a white collar business, I can arbitrage the shit out of off shore labor at below US prevailing wages, but the only way to do that with a blue collar business is to off shore the white collar work?
Ie, I cannot go pick up a
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Some of the most expensive real estate in america is just a stones throw away…any guesses?
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Who knew heritage brand investment banks were a thing!?
Who’s ready to re-launch JT Marlin with me?
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One on my lenders sells one of my mortgages, to to PNC of all banks. Now they spam me to buy another house, because they have no idea they sold my mortgage. Isn’t there some big data guy who should be using V-lookup to check this stuff ? Seems like a waste of bandwidth.
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@TheSalonDon
If Planet Fatness really cared about people being healthy or in shape, they wouldn’t have given out bagels and pizza for all those years. (Though the miser in me wishes they would bring it back.)
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Can I sue my IT guy if I lose business because my company spam filter consistently flags messages from clients, such that my response time goes from two hours to two days?
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@LPWhisperer
@ChandlerReedSMB
Shit. Didn’t mean to get on your radar.
DELETE DELETE DELETE.
All kidding aside, I am old enough to have had a POS realtor try to sell me a condo that was 4x my salary when I was 25 with a 3/1 ARM. It’s not really any different, today, but SMB ETA is a much, much smaller
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@theDSOguy
Nah. People still need to hire. Maybe employers will be inclined to make work someplace people don’t hate going to! If you have to use a non compete to keep your employees from leaving…that’s like using your marriage contract to keep your wife from leaving.
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Public service announcement / comment on my privilege: As of January 1, 2024 your platinum card + delta main “basic” fare does not get you into the delta lounge.
#needtoadjustmy2024TANDEbudget
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@Bradleyflowers7
Would love the gangs opinion on fair commission splits. I appreciate there are a lot of variables. Eg, when I was at Aon, it was 25 percent one time. (No book deals). Any ideas on what’s “normal” for the aggregators and middle market? I have heard 40/25 is pretty typical.
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Longer tweets about this later - I’ve been deaf in my right ear since 2010. If you meet me irl, you’ll probably notice. Life is basically one hard kick in the nuts after the other. I can no longer reproduce, but am immune to the kick in the nuts.
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@RobertMSterling
Maybe I missed it, but not sure that the headlines (and/or FTC) are addressing the other fundamental issue here for healthcare role-ups, which is how MSO/PC structures circumvent corporate practice of medicine laws. It’s like an open secret; maybe the letter of the law isn’t
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Little known fact: I started buying real estate 20 years ago so that I can live my fantasy in retirement of getting paid really well to mow lawns.
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My wife would like you to know I have not made meaningful progress on last springs to do list…
If anyone has a subcompact tractor or Terramite T5C they want to sell or trade for golf carts, the DM’s are open.
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@LisaGForrest
I am regularly shocked by how often I have to really dig into a CIM to figure out how the company generates revenue! (You’d think they’d teach this in week one of business school…:)
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One of the things I really struggle with, both as a manager of people and as a person who is managed (good luck with that, lol) is the “I’m your boss, do as I say” dynamic vs “hey man, we’re all peers here, what do you think?”
More explicitly, apparently I choke when I think
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For an industry that complains about how litigation has run amok in America and has claimed that ATLA is choking out free enterprise, insurance companies sure sue their employees a lot. "Sues Former Exec" is a headline in Business Insurance mag at least once a week.
(I used to
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@housleyd
The mso contracts with a friendly physician. I’ve insured so many of these (which requires understanding the legal manuverings) I actually wrote a white paper on it. And yes you can start your own MSO.
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@ClintFiore
@shawngorham
Shawn, I’ve dual tracked w-2 and real estate for twenty years, with much the same yard stick, and sometimes I also think, “I could have done so much more / am I over the hill?”
On the flip side, I think Clint is 100 percent correct. I cannot imagine doing what I’m about to do,
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@KHendersonCo
Excellent write up! If I get ambitious later, I’ll put together a companion about the economics of using RWI insurance vs escrow.
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@MrJoshFro
@SBA_Matthias
@Eli_Albrecht
@jackson__speaks
@SAOliver_Atty
Congrats guys!
Count me in :)
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@midmarketPEguy
I saw Carl Icahn at a conference once, and he said the funniest thing. I’ll paraphrase. “Private equity guys think they’re so smart, but they’re not, really. They all do the same thing. Anybody can lever up a business.” I don’t necessarily agree but can see his perspective.
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@LeadershipAcad1
I had a buddy get a quote on a roof. Estimator said $16k. Estimator went to truck, came back and said “ok My boss says I can do it for $8k.” Lost the sale because, clearly, anyone who can do it for $8k but first quotes you $16k doesn’t know what they are doing or will rip you
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I like these guys. Wish they lived closer to the Free State of Missouri.
:)
LA SMB community
See you in a couple hours. Della Terra. 6-9, or later. They tell me LA is trendy..
@chrisxmunn
Until then we’ll keep pushing
@MrJoshFro
@andyharbut
@SBA_Matthias
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@brokermybiz
@CoFoundersNik
@KHendersonCo
@mph_guy
@chasemurdock
@ChandlerReedSMB
@RandBusiness
It was great to see you…but garyvee was in the house? Wha!? lol. All kidding aside, agreed, glad we could reconnect!
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@DonovanBuilds
This thread is fascinating! I used QB 2016 desktop until they stopped supporting it. I used waves for the last two years, if it doesn’t integrate well with my community banks crummy api’s. (And the receipt function stopped working for a while).
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For the gen z / millennials - how much does presentation impact your impression of a professional services firm? Does a firm’s aesthetic influence whether or not you’d work with them?
#smb
#professionalservices
#insurance
#Accounting
#desktopublishing
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@SMBJackieHirsch
@SAOliver_Atty
My favorite folks to work with are the people that get this! It’s not a zero sum game. Like my favorite Hot Chocolate song, Every1’s A Winner.
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One of our main tenants is exit readiness. As an insurance broker that trades on our M&A experience, the buy-side due diligence we do gets the most interest. But that’s only half the job. The other half is ensuring that, as our clients’ business grows, the insurance and risk
Due diligence is meant to verify that the information you presented is correct, not for buyers to decide if they want to proceed with the initial terms.
Don't let a buyer change the terms of the deal during due diligence unless something material has been uncovered.
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@Mikethelummox
I have to apologize to everyone for sucking on twitter responses. When I hit reply, I can't see your questions? (Yes this sounds like an OK Boomer moment...) I'll figure it out, eventually.
1) Potentially, but probably not in this situation. If the customer really wanted out of
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