Thomas Ince
@thomasince
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Former Entrepreneur turned Investor
Austin TX
Joined June 2011
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Pinned Tweet
This is such a great quote 👇
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If you're starting or buying a business. Remember these four letters.
QSBS
This stands for Qualified Small Business Stock, and you can save millions in taxes if you do it right. You get up to 10M-500M in tax-free gains.
I've used this before and here is why I love it👇
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Do you want to know one of the best feelings in business?
Its when you hire someone & they come out of the gate like a rockstar (A Player)
Just hired someone 2 weeks ago as a "Business Development Associate"
Here are 3️⃣ way you can tell if you hired a A player 🧵👇
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Advice
We just lost a 4.3M EBITDA exterior home services type of platform yesterday b/c I was not flexible with NWC.
Seller did not understand it or trust it, and we held our ground. Seller went with an offer that had a more simple structure...keep the cash / AR / pay
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If you are buying or starting a business, try to do it in the teal areas.
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Small Sign of EQ 🧠
I always think it's a positive when someone suggests a time for a meeting & they throw out the time in your time zone. Does not count if there is a ton of people on the invite.
For example, they are East Coast and they throw out a Central time.
Small
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One of the top questions of 2023 for me is...
What will Brad Jacobs do next?
He is one of the most prolific dealmakers out there...would classify him as the most successful independent sponsor.
He has built 6 different billion+ dollar (revenue) businesses
Has raised over
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Wanted to share a killer infographic of Finance KPIs that
@BoucherNicolas
shared on Linkedin. Good stuff
Its a good assortment of possible KPIs to track.
h/t to Nicolas
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Term Sheet Tips for Independent Sponsors
Just gave this advice to an Independent Sponsor partnering with one Institutional Investor. These tips are for when you are at the investor term sheet phase and in regards to what to ask for in your term sheet:
Closing Fee: 2-3%
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For those wanting to know about non-recourse loans (NO PG) , this newsletter by SPP is a good monthly overview of what is market of what is market in the LMM
This is useful for SMBTwit to understand as eventually you need to bring on some debt to grow with no PG
Few ideas 👇🧵
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We need to go nuclear. It's the only viable option. No need for batteries.
It has the smallest amount of waste, and is the "greenest" option. Yes, more than Solar and Wind.
It is also the most stable "Highest Capacity Factor" which means its producing max power 92.5% of
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Some say the Silver Tsunami is not real.
I don't see how it is not real.
Millennials own only 7% of all small businesses, less than previous generations when they were that age.
...tweet continued 🧵👇
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This is the cost of a QoE we are going to do on a 27M deal, has 10 locations.
Some may ask, why is it so much? We have found that when the EV is over 20M, you need to use a big firm to do it, if you have 8 figure equity checks. Helps out with the money raise. This is from a
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Level Shifts: Thoughts on scaling a SMB👇
When you are growing, oftentimes new people will join the team and there is not clarity around a role, clarity around company best practices/principles, and clarity around core values/vision.
You see this more when a company goes
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When you buy multiple companies and make decisions on the fly. It helps to be able to quickly model out in your head what the MOIC and IRR is for investments.
Here is a printout that I have memorized a few so I can quickly model things in my head.
3 Takeaways 🧵👇
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Business Buyer Beware:
When you buy a business, always be prepared for sellers to retrade you on price at the last minute.
Often this is b/c EBITDA has trended up, or maybe they are having cold feet.
Here are some tips we have used buying 31 businesses to fight it
🧵👇
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Anyone interested in a Plumbing business that is doing 1.7M in EBITDA (proforma and according to broker)?
Its in FL and is residential
It does have some construction exposure and we passed b/c of this.
DM and I'll give you the details
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@ShaanVP
, dropped a 💎 on the
@myfirstmilpod
about a two types of viewpoints that help define people.
🪟 window vs. 🚪door mindset
I’ve noticed that this explains why some people smart people don’t reach there potential and others go on to massive success.
Difference 👇🧵
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Some businesses capture demand.
Some businesses have to create demand.
Part of due diligence is understanding if you are in the capturing demand business or in the creating demand business.
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Bud Light has had a rough couple of weeks. Much deserved, in my opinion.
Many don't know who the main owner of Anheuser-Busch is, and that's Jorge Paulo Lemann co-founder of 3G Capital. He is one of the most interesting billionaires in the world.
Here is his story 🧵👇
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One of the businesses we purchased was answering the phone less than 50% of the time, from the hours of 8-5 EST.
We started to track it and now its at 85%.
Goal is to get it 98%+
I'm very high level here and don't have the details, but the moral of the story is to track it
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Any recommendations for a pragmatic website developer. Looking to spend less than 3k.
Ideally Wordpress
It will be for a consulting firm website and a marketing company...helping out a friend.
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Wanted to give a big shout-out to the team at United Land Services, which is a portfolio company of
@lpfirstcapital
.
United was just ranked the 3rd fastest-growing landscape company in the country for the 2nd straight year. Revenue went up from 88.7M to 153.1M, and is now
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Curious about what a cold calling funnel looks like for a BD guy trying to buy a business in a buy-in build?
Here are the results of the first 2 months of activity.
876calls +235emails (he does a good bit of research before outreach to personalize)
⬇️
32 Owner meetings
⬇️
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Just had a great dinner getting to know
@jd_foote
. Such a nice and smart guy.
He is starting to invest more in the USA and traveling to show the USA to his daughter.
He is going to be buying some 🇺🇸businesses over the next few years, so he would be a good guy to get to..
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Missionary vs. Mercenary
When hiring, I like to go with missionaries over Mercenaries.
Missionaries: People who are passionate about the mission of the company. How they do it. Why they do it. The culture. The Why. The Game. Helping others win. Being the best.
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I've heard people say its depressing seeing it. But we are all going to die and it makes sense to make the best life we can live.
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ChatGPT does a good job of giving you an overview of the activity in an industry. See how quick you can pull 30 comps on a platform idea we had on Retirement Planning...almost as good as pitchbook and better than google IMO
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Rereading 100 baggers. Great book
The concept of building 100 baggers is very fascinating to me
I think this chart is a good one to memorize as an investor.
14% will 100x in 35 years
16.6% will 100x in 30 years
20% will 100x in 25 years
26% will 100x in 20 years
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1. You are willing to take action b/c you know that you don't have many weeks left. Why not make it the life that you want to live.
.....
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4. You think in decades vs. months. People often overestimate what they can do this year, but underestimate what you can do in a decade.
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Jack Welch said this. I think these are three wise things to track if you only have 3 things to track.
“If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cash flow.”
h/t the simple model blog
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If you're doing a buy-and-build strategy
One of the first things you need to consolidate is accounting.
Be ruthless in doing that fast.
Move it away from the branches / op-cos ASAP
Just a quick thought
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Hiring a CoS (Chief of Staff) at
@lpfirstcapital
.
@girdley
's post on CoS inspired me to hire one. I think this is a great job for someone that wants to get some business experience
Some things about this role, myself &
@lpfirstcapital
👇1/3
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4 Simple Axioms to know after you purchased a business:
1. Give, Give, Get
One of the biggest risks of buying a business is losing key team members. The first month or so after the purchase is the most critical. Everyone is hyper-aware...looking for some blues clues
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Went to
@joshuamschultz
's Austin SMB meetup yesterday. Great event, and he makes a great french toast. Thanks for hosting Josh
If you could not attend, here are 8️⃣Takeaways that you might want to know if you want to buy one or more businesses this year.
🧵👇
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Worm Farm for sale 🪱
1.45M SDE for 1.79M
This seems like a great opportunity (despite being in CA) for someone wanting to buy their first business.
There are riches in niches
I remember seeing this business on CNBC
Happy 4th🇺🇸
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2. You are more grateful for the moments you have with family. Put down that phone when your on vacation as you see when your kids graduate in not that many boxes head, even though they are little now.
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I've noticed a correlation that is common with the best CEOs that we have worked with.
I call it the "Strech Goal Mindset 📈🎯"
Here is what it is, and why its something that can help you grow to your potential.
7 Takeaways below
🧵👇
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Great post👇 Read the journey from
@MikeBotkin_
, must read. We decided to join forces yesterday and inked the deal 5 mins. before the wire cutoff.
United Land Services is very lucky to get to partner with
@MikeBotkin_
and
@Adrian_Pinto2
.
Now with them on board @ ULS, I
Almost 3 years ago to the day, while laying in bed, I opened the twitter app and tweeted out that I wanted to buy a landscaping business. I ended up doing it.
2 years ago to the date, we formed our holding company around buying landscaping companies and subsequently acquired 6
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Contrarian take: when your investing , the time you spend investing in the talent business is more important than what company you buy.
Find and invest in the right people
People > Capital
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Grit > Pedigree
If someone has a history of winning, likely they will continue to win.
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e = mc² for business
e = earnings
m = management
c = character
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An interesting mental model is to imagine your playing sim city, capitalism 2 , or civilization but in the real world. For those that played computer games in the 90's early 2000s
Makes you think bigger
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The most important asset in buying a business is the people.
The crown jewels are when you have a dynamic founder that wants to partner with you to build something bigger.
Can't put a price on that.
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Beware of Hidden Labor Reverse EBITDA Add-Backs
One thing to watch for if you are buying a business is Hidden Labor Reverse Add-backs. Here are a couple of examples.
5 Examples Continued🧵👇
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Headed to Capital Camp , DM me if you want to hang.
Also going to talk about rollups as an independent sponsor, any topics I should cover that people would like to hear?
@tsludwig
is moderating …looking forward to it
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🤣👇
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Advice to any Independent Sponsors out there choosing a capital partner.
The most important thing to evaluate when selecting capital partners is a combo of:
A. How are you going to work with them as a partner.
B. The certainty of closing and the speed they will work at it.
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🐊 Hunting
The closest you get to a live dinosaur.
Best hunting experience I’ve been on
10 Foot 2 inches
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5. You stress less, as you see you have a long life ahead and you don't get too tied down to the current moments.
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A quick thought/tip to searchers or independent sponsors out there.
Don't put the max EBITDA as a smaller number. Like if you said the max you would buy is 1.5M of EBITDA. The reason is, be open to 2M+ EBITDA deals as often those are better IMO. Even if you don't have the
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One of the best questions in DD is
"When was the last time you raised prices"?
When you find a business that has not raised prices over the years...especially over the past few years.
I LOVE to hear "we have not raised prices in 5-10 years".....assuming that there is
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This image (ad) is a perfect example of good management.
Make business a game, keep the score, give the team a stake in the outcome.
If you measure it, you can manage it "Druker or someone said this"
Seeing dashboards on the wall turns me on:)
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There are no rules in the world
All the rules were created by people like you, therefore, you can create the world you want
Live your life to make your 90-year-old self proud of you today
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If your are stuck right now , there is something that you are doing that is holding you back.
You might have to give something up
You might have a limiting skill, belief, or drive
We all have invisible weights around our legs, and the goal is to find the constraint
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Met some very interesting people as they traveled to Austin this week.
@chrisxmunn
,
@NickButton10
,
@HockJohannes
and his partner Bennett
If your ever traveling to Austin and want to pop into
@lpfirstcapital
/ share notes , would love to meet you
SMBtwit is amazing🙏
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Heart of Gold ❤️
Whether you are:
1. Bringing on new team members
2. Buying companies
3. Bringing on a new partner
Try to bring people into your life that have a heart of gold.
What does this mean? People with a Heart of gold have the following characteristics:
1.
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It's good to:
"Think in abundancy and not scarcity."
"It's always better to enlarge the pie vs. fight over the % of your slice"
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One Law you need to know to scale to over 50M in revenue. 💡👇
"Packard's Law"
“No company can consistently grow revenues faster than its ability to get enough of the right people to implement that growth.” – Dave Packard, co-founder of Hewlett Packard
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Homeruns⚾️ and Value Traps 🪤 with buying a business
The quality of the company is often directly correlated to the quality of the owner/leader. They are the gift that keeps on giving.
Value Traps 🪤: If a seller ever gives you bad vibes, don't do it. You might find a
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I have a friend who owns a couple carwashes in Knoxville.
He found a couple killer spots for some new locations in nearby areas.
He is looking for a partner or group to back him in helping him expand.
He thinks win-win and is flexible with different structures.
Let
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This the greatest county on the face of the earth that has produced over 1000 trillionaires.
Anything is possible 🇺🇸
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@SMB_Attorney
Some people are too afraid to fail , too smart for their own good.
I've noticed that many people that build great things have a tendency to shoot first and then figure it out on the way.
"jump and build the plane as you fall"
I'm in that camp
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7. There is a good blog post on
@waitbutwhy
page on it. Its a good mental model to have in your brain.
Get the poster and frame it in the office.
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6. Tips. Put your age on the left hand column so you can associate your age with future years.
Its nice to know that in 2042 I'll be 61. I make choices today that will be better for my 61 year old self.
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So happy to see Mass Timber come to Austin. It think it makes sense on so many levels compared to steel.
Greener + Cost Effective + more beautiful
It's also very interesting is that it sequesters a high level carbon at a high level.
The crazy thing is its better for
This mass timber project in East Austin is turning out really cool.
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Speed is one of the biggest advantages with buying a business.
When your starting out , you don’t know how much of an advantage you have bc you have full bandwidth and speed is on your side.
Sometimes , slowness is and advantage , namely when the price is not right, wait
Yearly reminder: If you want a new habit to add to your arsenal, make it “speed.”
Speed of response, speed of execution, speed of decision-making.
Speed is a force.
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2. Winners love to keep score, even when not asked
After the first week on the job, I get this email with a weekly tracker. I was so happy to see this. Why?
We did not ask for or train him on this.
He is a winner, and winners want to keep score.
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"A wealth of information creates a poverty of attention"
- Herbert Simon
Summed up: As John Paul DeJoria says something like "Make sure you track the vital few and disregard the trivial many".
We like to focus on Critical Drivers over Results. If you can dive down to the few
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Came across this interview with
@elonmusk
. Thought it was informative, especially the 5 requirements at the bottom. He are some notes:
Q: Everyone is Wrong, do you believe that?
Everyone is wrong some of the time, it doesn't matter who you are.
The most common mistake in
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@NdamukongSuh
Follow the money ..schools conform to get government loans (title 4 loans). I founded and sold a company with over 100 trade schools (non-title 4)...also own one for HVAC training now. Happy to chat.
There needs to be more of an apprenticeship/Hands-on model in the USA
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Caution first-time business buyers.
*All EBITDA is not created equal*
Looked at a public pool management business that managed public and HOA pools. They represented that there was 600k in EBITDA. Was converting only about 200k of that into cash.
Put it another way 👇
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Dopamine over Dollars.....
In today's competitive work/inflation environment, try to solve for raises in dopamine vs. raises in dollars.
-Show Appreciation
- Make business a game ex. The Great Game of Business (book)
- Lead and Inspire
Daniel Pink said it best in his book
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Elastic Capacity ⌛️
When you are buying businesses, improving them or scaling the business you founded. Try to build in elastic capacity in your organization via additional resources and team members while being aware of bottlenecks.
If fixed capacity is defined by rigidity,
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4 Indicators that show we are leaving a mild recession👇
Seems like we are heading out of a recession and already had a soft landing.
I'm an armchair economist but here are a couple things I'm seeing these things and it seems like we had a recession late last year and are now
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Great post about being able to withstand the grind of looking for a business.
I told some self funded searchers recently to expect to look at least 100 businesses and meet with 100 owners before you put in an offer. With reps you get the perspective of what a great business is
Three lessons from a CEO of a PE fund which has $13bn AUM.
He shared on how he started out:
- Left investment banking in his early 30s and became an independent sponsor
- Simultaneously started consulting / advisor to support his family and pay dead deal fees
- Didn’t find his
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Big shout out to
@SecretCFO
Really look forward to his newsletter each week.
Shared the outline of his last one with a CFO in our portfolio.
This week did not disappoint also. Sign up for his newsletter, even if your buying your first business with no CFO.
His 🧵👇
One of the toughest things about the CFO role is having to be so many different things to different people.
To help adapt to this, I built the five hats model.
Today I shared that model with 5,500 current and future CFOs.
You can read it here:
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Listening to the Pomp podcast , with him interviewing
@BrentBeshore
...loved this dialog (rough dialog)
Pomp: On the westcoast, its all about growth rate and no talk about EBITDA, and on the westcoast its all about talk about EBITDA.
Beshore: In the Midwest , we only talk
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It's Trust and Verify
But if you lose trust
It's just Verify b/c their is no trust
h/t to one of our CEOs
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No one is going to help you.
Anything you want, you have to go out and get.
Its my fault if anything goes wrong
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Two Types of Investors
Bettors Vs. Builders
Bettors = look for mispriced assets and invest when there is an attractive IRR base return
Builders = look for a type of investment that they can deploy a set of systems or resources from their holdco or skillsets to achieve an
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"You name the price, I name the terms"
Sometimes you get a seller that is so fixed on "the multiple or a headline EV amount"
Here are some situations that you can use to get the terms you want, so you can pay a full-price multiple.
🧵👇
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