Buying Blue Collar Businesses with Malcolm Peace

Josh (00:00:02) - All right, everybody, welcome to the deal, Scout. We got seven minutes on the clock. What is your name? And tell us about the kind of deals you're looking for.

Malcolm (00:00:10) - Yeah, my name is Malcolm Peace. I'm based in Austin, Texas, and we buy exclusive businesses in Texas doing 3 to $12 million in revenue that have been around longer than ten years. We love the industries of blue collar. We love those businesses where you got to roll up your sleeve, get a little messy. I love it at the end of the day when my guys can't shake my hand, they gotta give me the fist bump because their hands are disgusting. Those kind of businesses are the ones that people want to stay away from, but I think the money's there. So we go hard far into it as far as we can by taking technology and applying to them. So our game plan is to take low-code no code software into these businesses that have obviously or historically been neglected in that way, and we exclusively work with those to help them scale.

Josh (00:00:50) - Nice. So give us an example of the the blue collar kind of businesses. Are we talking plumbing businesses? Hvac yeah.

Malcolm (00:00:56) - So we focus a little less on home services because that's a very interesting niche. We could kind of get into a longer aspect of it. But um, there was a big roll up for a period of time in Hvac. Everybody knows. But that was happening in other industries too. So we love commercial, um, services like that. So we'll definitely check those out. We also think there's an opportunity in government contracting, um, businesses around that same one. So we've looked at folks that do, um, you know, fixing of manholes, um, commercial electrician, underground wire for utilities of missed fatalities, um, all sorts of things like that. Uh, we have bought into the manufacturing space. That is definitely a focus of ours as well. Um, but we are exploring that and we're hopefully getting close on a logistics company here soon. So, um, we, you know, we're trying to build out the platforms and looking at things that we can play our playbook and being able to get to a know that our playbook just doesn't fit.

Malcolm (00:01:46) - It's incredibly important. And that's always an awkward conversation with an owner, right? They they need to sell for whatever reason or they want to transition their business. And we've got to ultimately decide, can our playbook really work? Because, um, candidly, we're not you know, we're not trying to just raise funds all the time and all that kind of stuff. We're trying to build a reputation over time about being able to execute on the things and the knowledge that we have.

Josh (00:02:05) - Yeah. So the value proposition for the business owner right there, they're in Texas. They're in the hot heat or in the cold winters. They're out there grinding, doing the blue collar work. And here comes a guy and you're like, hey, maybe you're interested in selling. Why would they want to take a call with you?

Malcolm (00:02:21) - Yeah. Great question. So we fill the niche of what I like to call the, um, the quasi son, niece, nephew or daughter that they've always wanted to have because a lot of these businesses when when you take a business from 0 to 7 figures or low seven figures for that matter.

Malcolm (00:02:36) - Um, it's a grind on the family, and there's often a lot of negative connotation that happens around the business with these family members. And so we try to fill that hole that really that owner really wishes they could have had internally within the family. Someone wanted to take over. Some wanted their brick manufacturing company, their roll off dumpster company, um, and to continue it on to the new legacy. Um, you know, historically that businesses don't transition very well, um, in family. And there's a lot of reasons for that. Some of it is, um, you know, just transition of kind of the structure of the deal, transition of control, all sorts of aspects. And so, um, we come in and we say, hey, look, business owner, we love your manufacturing, your service company, whatever it may be. Um, we would love to be able to implement the following game plan. And I can assure you, in five years time, you'll be welcomed with a warm hug.

Malcolm (00:03:21) - Because I know what it took for you to get to where you got to. And so that's that's the real truth. And and my belief, um, and I'm sure that that's the sentiment for most people. There's a different skill set based on the season of the business. And so when we look at these businesses that are kind of low seven figures, taking them up to $12 million in revenue and trying to double revenue in two years, which is always our goal post that we shoot for. If we're going to do that, there's a different skill set that has to happen. The business can no longer be dependent. There has to be standard operating procedures that happens. There's got to be automation. There's got to be engagement for, um, kind of low task employment. So there's a lot of aspects that we play into that. But our hope is that, um, the owner sees the greater vision and that we can play that skill set to take him there. Yeah.

Josh (00:04:02) - You talk about the goalposts.

Josh (00:04:03) - Uh, repeat those for me, because I think that those are important for for people listening in is you have a very specific niche and, uh, like, kind of like guidepost for you on, on making decisions. What do those look like. Yeah.

Malcolm (00:04:14) - So um, there's a multiple reasons for that. But to keep it really short, my framework of belief is that if you set a goal post and you make different decisions to get there. So take the football analogy one step further. If you ultimately set the goal post short or different than, uh, potentially a big goal or something that you really think is possible to achieve with this business, you're going to make different decisions. Um, depending on what yard line you're on, you're going to make different decisions. And depending on how much time is on the clock, you're gonna make different decisions. So if I put a time clock of two years, I'm going to make specific decisions around that. What does that expansion look like? New market expansion.

Malcolm (00:04:46) - What does it look like to increase capacity in a real easy, tangible way? So that was what we did recently. So manufacturing tangible reason manufacturing company big bottleneck that we have got a vendor that's able to do it. We can scale up really fast by employing that vendor to be able to do the exact same thing we do in-house. And. And so that allows us to scale up quickly. Right. And so then we just then we have to do the subsequent, you know, process to be able to manage all of that quality control. But at the end of the day, the goal is to be able to scale quickly. If that's the case, we got to make certain decisions.

Josh (00:05:15) - Yeah, I love it. Yeah. And if you have a 50 year plan right, you're going to make different decisions based on time frame. Time constraints help us make different decisions. If you need to make payroll tomorrow, you're going to make different decisions than you're trying to pass this off to your grandkids.

Josh (00:05:28) - Oh very interesting. What is the when when working with a family business? Um, are you looking to have the the the the founder exit or stay along? What are the best things that you found working?

Malcolm (00:05:40) - Yeah. So, um, nine times out of ten, we're dealing with owners that are dealing with a 3DS, divorce, death or disinterest. And typically I say it in death because that one tends to be the the one that comes up more often than not, people reach a certain age or reach a certain lifestyle or life moment where they need to be able to transition out. And so as a result, we come in and fill that. But to answer your question more directly, um, we work with the business owner to find a solution that works well for them. But we do believe part of our thesis is that businesses that get to low seven figures often are very dependent on the owner. They were the technician, they were the expertise in that way, or they were the one that got the vendor up and running.

Malcolm (00:06:17) - And so as a result, um, you know, our belief is that we got to build a business where that owner is not in the middle, call it a decentralized business.

Josh (00:06:25) - Yeah. That's so good. And the so there's an identity thing that we could talk about at a later thing when someone exits their business. But we're running out of time for people who are looking at maybe doing a deal with you or finding a way to work with you guys, what's a good place for people to do that?

Malcolm (00:06:40) - Yeah, I'm all over LinkedIn and Twitter under Malcolm Peace, but more directly, you can find us at Sarah Growth Partners se tsr.

Josh (00:06:49) - Com cool. All of that information will be in the show notes. Guys. Welcome to the new series of seven Minute dealmaking. I hope you guys enjoyed this. If you have a deal you'd like to talk about the deal Scout comm. We'll see you all on the next episode. Bye, everyone.