Glass, Cash, and Real Estate: A Dream Deal?
31:11 Share

This can be a fairly competitive market, but glass is like a huge umbrella. I don't see how scale really helps in a roll up of this space. I think this business is just going to be one that's going to stay really pregnant. Oh, another episode of Acquisitions Anonymous. We don't have 100% beard anymore. And thumbs down on just the plus industry.

Welcome back, everybody, to another episode of Acquisitions Anonymous. I'm Mils Snell, one of your co-hosts. Me and Michael Girdley today talk about a business kind of in my backyard in Bluffton, South Carolina, which is down near the Beaufort area. It's a glass contractor. They do residential showers and mirrors and kind of decorative glass. At the end of the episode, we're talking and we're like, wow, it checks every box. It includes real estate. It's half a million dollars in cash flow. It's a lot of money.

It's a reasonable price. It's a stable industry. Like it, it is a perfect example of kind of a buy and hold buy and maybe grow conservatively business. For those of you who are looking for that type of thing, it's not in a major metro area, but it's in a growing market. Like it checks so many boxes. I really think you'll enjoy this episode with me and Michael stick around after a quick word from our sponsor.

Okay, so everyone knows that one of the first levers you want to pull in an acquisition is updating their technology, updating their systems that might still be running on a spreadsheet or even on pen and paper. But tech is complicated. There's a lot of solutions out there. So choosing the right cloud platform, the right CRM, the right telephony, compliance, cybersecurity, not to mention implementing all that stuff. That's a job in itself.

And I want to tell you about this week's sponsor, which is Nick Akers and Enzo Technologies. So Nick actually knows about all this firsthand. He is a former searcher himself and bought Enzo Technologies, which is an IT firm for small businesses.

So Nick has seen the tech challenges that searchers face when acquiring businesses. He's seen them up close firsthand because he is a searcher. Now his team at Enzo regularly works with searchers on acquisitions, offers a complimentary IT audit of your target so you can make a plan for what you're going to do on day one. Nick takes a personal interest in all of their searcher clients and draws on his own experience in the search phase.

And his business, Enzo, actually dates back to 1989, even before he acquired it. So the company has deep expertise for managing the tech for hundreds and hundreds of small businesses over decades. So if this sounds like something that would be helpful to you, check out EnzoTechnologies.com, I-N-Z-O Technologies.com. Or you can just email Nick directly, Nick at EnzoTechnologies.com.

Mills, do you want to talk about my problems or your problems? We could put them together and make a real sandwich out of it. Have you considered becoming a roofing guy on the internet? Like the roofing expert they call when it's like the lumber guy or like John Wilson is for HVAC or Yossi is for car dealership guy. Have you considered this? No, I haven't. That would be like knowing the best crack dealer in your county kind of thing. I don't feel like it's a positive association.

So the interesting thing at our conference, and I'm not just plugging our conference, though, people should show up next year. That was smooth. We're selling tickets. Well, that's actually what made the conference pretty good is that

here's what we did. We raised the prices a lot. It was not cheap to go. So the people that showed up were serious. They showed up, they were serious. People were taking notes. They were showing up at everything. Because if you're going to spend a week and 8,500 bucks to go to a conference and fly to Utah, you're going to take it seriously. And so we got all these people that were super smart, which was terrific. And the speakers were great. So one of them was

John Wilson talked about how his kind of meandering journey to create media stuff has ended up directly benefiting their core business of HVAC because he interviews all these people and learns from them in the podcast. And then there are some other businesses they've gotten involved in that make money selling to other HVAC people around the country. And then lastly, he's like getting acquisition opportunities thrown at him because he's like, they know him.

So anyway, that's where I was like, oh, do you want to be roofing guy? Ran Larson came by. He was driving through Columbia and stopped by yesterday and he said really good things about the conference. He was awesome. I skied with him. By the time this comes out, we're going to be doing a business deal with him to

take something out of the Girdley portfolio. I'm getting, by the way, I'm trying to get better, not only at starting companies, but getting selling companies. That's the new me. That's a pivotal step. Usually now that I'm 50. Well, I've actually, I done it. Like I sold the coffee business and now this year I'm trying to do one or two. Cause if I keep starting stuff, I got to get some of the stuff out of my way. You're just going to keep accumulating. Well, speaking of speaking of, I have a, I have a deal to talk about.

So did we just end up talking only about my problems? Does that mean you have no problems? No, I got a long list. I got a long list. This is kind of interesting to me because it is on LoopNet, which LoopNet is owned by – it's co-started LoopNet. It's the major commercial property listing site, like –

probably as big or bigger than Zillow, you know, in the, in the commercial world, but there's some businesses for sale. And most of them are like restaurants and laundromats and like convenience stores, more kind of like the run of the mill. But this is in South Carolina, Bluffton, which is down near, you know, Hilton head and Buford. And it, it just piqued my interest for a few different things. It looks, this looks like maybe a real photo of the business, but,

Um, there's palm trees, so it's gotta be South Carolina. And there's, uh, two, uh, work vans, one pickup truck, and then another van. And they've got, you know, these special racks, uh, on the side of them. And, but you know, four trucks and a little, uh, storefront. And this is, it says establish glass business in growing Bluffton, South Carolina, Jim Hall. Uh, he gives his number and it specifically says voice only no SMS, like

Don't text me, millennials. So the asking price for this business is $2.7 million. The gross revenue is $1.8 million. They have FF&E furniture, fixture, and equipment of $750,000. The business has been around since 2002. Cash flow of $500,000 even. Inventory of $150,000. And the real estate is $700,000.

And this description says,

Products include shower glass enclosures, glass offices, railings and partitions, fogged and broken insulated glass replacement, commercial storefronts, and in-house fabrication of glass and mirror products. Hilton Head Glass currently services Hilton Head, Bluffton, Hardyville, and Ridgeland.

Listed at $2.7 million, the business includes a recently renovated 1,400-square-foot showroom, the equipment and machinery necessary for custom-cut glass orders, and five vehicles equipped for glass transportation. The business is...

is in the only commercial slash industrial zoned area in Bluffton, allowing for 24-7 production. So you know you're in a small town when you're the only person. You can say we're the only people who are in this zoning area to accommodate future growth.

But Beaufort County is the fastest growing county of all in South Carolina, making it the 10th largest county in the state. Research indicates Beaufort is growing faster than 38 other counties throughout the Palmetto State. South Carolina is such a small state. These stats really don't help. Yeah, we have four million, maybe four and a half, five million people who live in our state. So it's kind of funny that they're like, you know, it's growing faster than 38 other counties. We might have we might have 50 counties. I'm not sure how many counties we have in South Carolina. It's not that many.

But anyways, they're really excited about Beaufort County and the growth. And then there's this little teaser. I thought it was going to be something about the business. But when I clicked on it earlier, it's actually just like a commercial for Beaufort and Bluffton. Oh, that's adorable. Yeah. I love small town America. So this is significant. They are including the real estate and the asking price. The building is 3,400 square feet. There's seven employees. They're including all the FF&E.

It says they have the five glass vehicles, two Promaster cargo vans with glass racks, one Ford van. They have a glass washing machine, a spindle cup wheel edging machine. These are whatever tools that are necessary for this. Brommer tilt table trailer for aluminum storage, warehouse storage equipment.

They say they have recurring customers focused on residential homes. Let's see. Building.

The staff is fully trained and the owner or the owners are including three weeks of onsite training and support for the buyer. They want to retire and they are telling us the business name. They're telling us the address. This is I'll zoom out for those of you. So this is down in the low country, you know, Savannah, Hilton Head, Beaufort, all south of Charleston and Columbia is way up here. It's probably about two and a half hours away.

So, okay. So just to make sure we're all on the same page with these guys do when somebody needs like a glass shower door or a glass window, or it sounds like they also do some new construction as well. Yes. I'm currently going through this process right now and I've paid, I've paid, I've written checks recently to somebody who is very, very similar to this. So I think the biggest part of this business is the,

Shower surrounds glass around showers. So people don't have shower curtains, you know, as they kind of move up the price point of bathroom design. And then also like large mirrors. These are the types of companies that would do those kinds of things. They, they mentioned that they also do some, you know, commercial work, but.

Most houses, right, have a unitized window. It's a double hung window and you're buying it from like Pella or Anderson or whatever, and they are installing them new construction or retrofitting your windows.

This business is not doing that. They're not doing typical residential windows. Now, the people I had come to my house, I have some older windows. I had some broken panes and they're just a single pane window. They replaced those. But this is not like blow and go new construction setting, you know, 100 windows a day in a new construction house. So this is a lot of repair, a lot of replacement, a lot of small scale repairs.

$1,200, $2,500 jobs. Yeah, I would say more like probably $2,500. I just did one that was $2,500 and I have one that's a little bit larger that's $3,000. And did they say how big the staff is? Seven. Seven. So this is one of those owner's wife is probably doing the books. Our spouse, if the owner is a she. Yeah.

And but it's a couple running the business and then they have one one receptionist last office manager and four techs running around doing installs. Do we think the owner is doing all the sales? Probably so. But I think this is like one of those businesses that I mean, they've been around 40 years. They probably work with all the same home builders.

They're in a, this, this market is growing a ton. And when people relocate to South Carolina, which a lot of them do, they go to Hilton head, they go to Buford. They, this is a very desirable part of the state. And there's a lot of,

There has been a lot of new construction down there, but there's also a ton of renovation work happening to semi-older homes, like 30- and 40-year-old homes. When somebody goes in and is renovating a house there, they're upgrading the bathrooms, and they're taking out the shower curtains, and they're putting in shower glass. Okay. Okay.

Well, all right. So price-wise, they're throwing in the real estate. So it's four times cash flow if you deduct the value of the real estate at $700,000 because it's $2.7 million. Yep. That was $1.8 million in revenue. Real estate is, in theory, $700,000. Do we think this picture that they have here is the actual building? Yeah, I think this is. I think this is it, yeah. Because it's kind of cute. It looks like they laid out their trucks in a way that would look like super kind of like show-off. Look at this. We have four trucks. Yeah.

I'll zoom in a little bit more and we'll see. I bet that this is the same building. It's like a split face block. They're right next to the Sam's Club. I mean, great location. If you need to get extra coffee and or Cheetos for your... Yeah, that's definitely the building. That's definitely the building in the picture. Okay. And it looks like it's in one of those like office condo parks. Yeah. Where they've condoized. Right next to it, they got a gym. Yeah.

Signs and wraps by Primal Graphics. Home Team Pest Defense. Hilton Head... Oh, there's Hilton Head Glass. There they are. Yeah, yeah. Smith Outlet School Supply Store. Advanced Integrated Control. And this is just like the headquarters for like every type of small home services business that you find in any town. Exterminators...

vehicle wraps and then a little gymnastics place where everybody can bring their little girls for gymnastics and boys, I guess, but mostly girls. Yeah. It's in that kind of park for sure. So do I have to move to Hilton Head if I own this business? Yeah. Yeah, definitely. I mean, this has been an owner centric business and it needs to, it needs to probably be replaced, you know, or be maintained as an owner centric business.

So I'm buying myself a job with this one. Totally. Which you say that like it's a bad thing. No, I just have plenty of jobs already. Yes. You don't need another job. I'm cool. I don't need more jobs. So, yeah, this so this is let's check the boxes here. This seems like SBA totally doable. It's priced right at four times cash flow.

And they're throwing in some real estate. So it's going to make it easier to get a loan. I can channel my inner Heather who's at UCLA or Harvard or someplace today being a baller like she is speaking. Yeah. Like, yeah, what's not to like?

Hey everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called Capital Pad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So Capital Pad is a marketplace for acquisition entrepreneurs. That is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest in

in acquisition deals. So if you want to back somebody buying a small business, Capital Pad is the place to do it. And if you want to buy a business and need capital, you can go on Capital Pad to be introduced to investors. So the really great thing too from the investor side is that Capital Pad takes care of all of the details that can get hairy with small business acquisitions.

They handle standardized terms, standardized governance, standardized distributions, all upfront in black and white. Basically, Capital Pad professionalizes investing in small businesses. And the returns can be really, really good. I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right.

So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com and tell them that Acquisitions Anonymous sent you. So I think this can be a fairly competitive market, but Glass is like a huge umbrella.

You have some people who only do like auto glass, like safe light and quack glass and people who just are fixing your broken windshield and processing insurance claims. That's one end of the spectrum. The other end of the spectrum is the people who do massive curtain wall construction. Like they're doing the glass on skyscrapers and high rises, right?

There's this kind of wide range in the middle, though, of companies like this that sometimes they do storefront glass, which is just retail storefront. You're not buying a residential window, but you kind of need something a little bit more out of the box. These guys will do that.

It is there are some barriers to entry in the sense that you can't just go to Lowe's and buy this glass and cut it yourself like you would a piece of plywood. If you're like building cabinets, you know, this is specialty supply and specialty fabrication.

So you it's not impossible to recreate and it's not like there's any proprietary protection around what they do. But there is at least some some barriers to entry and some upfront costs. The concern I have, though, is even with that, like if you look at I just Googled glass providers in Beaufort.

And, you know, this is not a huge area in terms of population. And there's a lot. But now, look, auto glass comes up, right? There's a bunch of different... But this is beachside glass in Hilton Head. And they're doing something very similar, it looks like. There's a picture of shower glass. There's somebody working on some, like, really fancy looking windows. So it's not without its competition. That would be the biggest concern for me is...

you know, how stable has this business been? That's your first box you have to check. And then the second is, if I want to grow this, am I competing with low cost providers? If I want to grow this, do I have to grow geographically? Like, do I have to go start to serve Charleston or Savannah one market away? You know, or do I just have to try and do traditional business development and go knock on doors and meet with residential builders and home renovation people and real estate agents or something?

Can you scroll down? How are they doing review wise? Do they have enthusiastic customers? So Carolina Glass there has 4.7 stars. Yeah, they don't even show up, which could be an opportunity. Hilton Head. We determined it was called Hilton Head Glass, right? Yeah. Hilton. Great name. We're not outing people anymore. They outed themselves in this one. There's Hilton Head Glass. Okay, so they're way down, but they've got 26 reviews.

and 4.1 stars. Yeah, not horrible. The person at the top has 72, 74. So I would say they're kind of, you know, maybe slightly better than average in terms of just Google reviews. Yeah. Well, let's look at the reviews. It's interesting. To get good at reviews is actually such a low bar. I think so many small businesses have no clue how to do their reviews well. They have some one-star reviews.

All right. General looks like pretty enthusiastic customers. It looks like here's this. Well, here they responded to this one from Francis Brealt. And this is, yeah, this looks, this looks like typical kind of service-based business. You know, they're mad about streaks, you know, on the glass and they're responding and beautiful showroom. They do excellent work. Four years ago, seven years ago. It looks like there's some opportunity there for sure. Yeah. Yeah. Yeah.

And on the local kind of Google my business stuff. So, man, I am scared about a thesis with this that would require you to go to those other markets like Savannah, Charleston, especially when you're doing it's one thing when you're doing $25,000 installs or $100,000 installs. And it's one versus when you're doing $2,500 ones like

Trying to schedule and have your text drive three hours and going that just the drive from Hilton Head down to Savannah is going to cost you a ton of a ton of margin here. So it seems like you're a pretty local business. Yeah, I think if you're doing that, it's you're at your you know, you're opening new locations, which is you're leasing a space. You're buying a truck. You're staffing the office.

The nice thing about this business, I will say, is they can probably fab everything in one location and then they can just move it back and forth and then just have an install crew and like kind of sales and estimating, you know, in other offices. But this is kind of a,

An interesting conundrum that you come across with businesses like this, the name Hilton Head Glass does not help you in Savannah. It doesn't help you in Columbia or in Charleston, right? So do you, like, it's this kind of perennial problem when somebody's called, you know, like Columbia fill in the blank, Columbia roofing, Columbia electrical, whatever. Like when you grow, you outgrow your name.

that's why works works anywhere though that's why you change the name to girdley glass it's super easy i i'm happy to license anybody the name uh for a small amount by the way somebody called and offered it by girdley.com the other day oh yeah you're you're a lunatic i don't know what you're doing do you know anything about business nobody wants that um

So, yeah, and I think it's one of the funny things people don't understand about glass businesses. And I didn't learn this until I dug into my buddy's glass business. People think glass businesses are like glass cutting and glass building kind of businesses. They're frame businesses. That's what you're doing. You're making generally making custom frames and installing them. Yeah. So if you go into the extrusions.

Yeah. If you go into these places, they have CNC machines, they have people running and creating custom frames. So they're getting the metal and then based on whatever the architect says, they go from there. And then the bigger ones are doing a level of kind of value engineering with the architects being like, Hey, order this type of glass, order this type of setup. There's actually a significant amount of innovation in the glass industry. Still people would think that's not happening, but all the whole combination of new materials and stuff like that is pretty fascinating.

And as the businesses get bigger, then all of a sudden you're not just doing glass, you're doing glass and you're doing wall panels that integrate with the glass on large exterior building envelope.

And it is, I will say, I mean, as you move more towards building envelope and away from kind of this retail shower, you know, railings, you know, mirrors kind of business, it's incredibly litigious because these things fail over time. And there's a lot of, there's a lot of room for error if, you know, the bead of caulk isn't right and the windows aren't glazed correctly. Yeah.

and they leak, then they're very expensive to fix. They usually get compromised in a bigger area before you find it. And then all of a sudden you're having to take brick and stucco and stuff off the side of the building, redo the windows. It's a very problematic kind of thing. But if done right, I think you get paid for that risk.

Yeah, and I think you see that in the reviews too. Like this is a hard business to be perfect at because there's just so many things that can go wrong. I mean, I think one of those one-star reviews was a streak. Like the person didn't like the streak. Like, we'll get some Windex. But it's also just –

ultimately why this business is one where there are just so many mom and pop local business owners, because there's just no better way to structure this. And there's no, you know, there's no kind of national brands where it makes sense. There's none of that kind of happens. So this business is what it is. It's priced totally fairly for it. I think so too. You know, it's interesting that

I had a conversation with a private equity firm the other day who's trying to do a consolidation in the roofing space, more on the residential side, but they're just kind of trying to get their bearings. And I was kind of like, there isn't a national player. And that's probably for a reason. There's a lot of $5 to $10 million residential roofing contractors, but there's no residential roofing contractor who's at, you know,

500 million. And, and I think that's for a reason. I think that there's some industries that kind of are mom and pop intentionally, or, or as a by-product of the service they provide, you have safe light auto glass, right? Which I don't know how big they are. They've got to be in the hundreds of millions, but it's because they've gotten really good at insurance claim processing. Yeah. And so there, you don't have that same thing here. Yeah. I don't think you have those same ingredients. Well, and there's a national, they can have a national brand, right?

you know that makes sense in safe light we've all heard the safe light repair yeah it makes sense in that kind of situation but i agree with you like local glass like you're going to call the fiber it's the same reason there's like a bunch of random local plumbing brands doesn't mean they're not all consolidated into a bigger thing but yeah it's tough to see how a roll up here works in this space as well

Because for plumbing, it's not the brand. There's local brands. It is the kind of standardization that they do, right? And the operational efficiency they get at scale and all that kind of stuff. So in theory, that's what makes sense. But beyond kind of doing marketing better, which these guys clearly have some opportunities, I don't see how scale really helps in a roll-up of this space. I think this business is just going to be one that's going to stay really fragmented.

this is also one of those things that the product is really, the core raw material is really heavy. And so, you know, it usually stays kind of,

you might order big pieces of glass and they get kind of sent regionally and then they get broken down from there into smaller pieces, but nobody is, you know, ordering their shower door from two States away. It's just the freight starts to eat into the actual cost. All right. Well, we're coming up on the witching hour for this episode in terms of time, we're supposed to stop at 25 minutes, everybody. Cause evidently you guys all turn off the episodes at 25 minutes, thousands of you listening to these. Thank you for being here. Uh,

So where's your head at on this one? I'll let you go first. Thumbs up, thumbs down. I think if the buyer business fit was right, it's super interesting. Bluffton is a little bit too far away for me and there's no synergies for my business, but it's very intriguing. If I had a person in Bluffton who I knew who was young and hungry, I think with

I'd probably be a little bit more aggressive on price just because it doesn't check every single box for me. But I do like this and I do think this business is stable and it's durable. I think it could grow nominally, but I don't think this business is going to double in three years or anything like that.

No, I think, yeah, I think you're right. And I think maybe you could get in 20, 10, 20% growth. You know, you're not going to be looking at that kind of crazy hyper growth. This is just a great path. I think for somebody who wants to, you know, do kind of the classical thing that we hear about over and over again for people on Twitter, which is, Hey, I would like, I, I want to get into a stable business. I want to run my own business. I want to do an SBA and I want to buy something at a fair price and I want to live a nice life. Like this is great for that.

uh it's not great if you're like i'm gonna do this i'm gonna use this as the fundamental for my holdco and then i'm gonna like acquire all this other stuff and i want to be you know like this is not that kind of high variance thing this is just like a nice stable like it's not going anywhere people still need glass

Like it's great and it's priced fairly and you get to live a nice slow life in Hilton Head, South Carolina. You want to live small town life. It's perfect for you. So for the right buyer, I love it. I think for you or me, it's probably pass. And for, for $500,000 in cashflow, let's just say that is material and that's, that's real. I mean, that gives you enough to service some debt, gives you enough to pay yourself and probably a little bit of margin for error. And if you grow the business,

Over the next 10 years, great. You have more cash flow cushion over your debt service. And if you don't, it's probably a stable enough thing as long as you don't mess it up. Yeah. I think this is a great path to just an amazing life. There's some risk here because you're going to do an SBA loan and stuff like that. I mean, you could find some equity investors in something like this. I think you're not going to have a problem with it.

It's a really just stable, good business. Priced right. And it's got real estate in it. This is one of the better deals. I mean, this is no worm farm and it ain't no pizza boat. That's pretty good. Well, thanks everybody for sticking around and listening to our thoughts on this glass and glass business in Bluffton. Were we like low energy Friday? I don't know. I mean, I...

Yeah, probably. We're probably like on seven and a half out of 10. Well, you're out of the four of us. You tend to be the most like even keeled, you know, here. I don't like energy drinks, but I'll chug a Red Bull before the next one.

Well, I mean, Bill is at the top level because Bill's like, I'm bringing it. Let's go there. You know, I'm me. And then I think there's Heather. And then you're like, you tend to be a notch below, which there's nothing wrong with it. It's just your personality. Like, you're just like, hey, I'm Mills. I get all my excitement out at 530 in the morning when I'm getting my crews out the door and people are screaming in Spanish. You got the vibe of a dad who has like little kids and woke up at 430 in the morning. Yeah.

Those things are very true. I remember how that was. You're just perpetually just exhausted. Yeah. Now, now old guy, my, I, I wake up four hours before my teenager does. It's great. And then he says, then he says nothing all day. You're like, cool. Glad we connected. All right, man. Gotcha.