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Law Have Mercy!
Law Have Mercy! isn’t just about the law anymore—it’s about life, business, health, and everything that sparks curiosity. Join Personal Injury Attorney Chaz Roberts as he dives into candid conversations that mix legal insights with lifestyle tips, entrepreneurial wisdom, and personal growth. From breaking down complex legal issues in simple terms to exploring the challenges and triumphs of health, business, and beyond, Chaz brings his unique perspective and passion to every episode.
Whether you're here to learn, laugh, or find inspiration, Law Have Mercy! has something for everyone. Just remember: the opinions of our guests are their own, and nothing on this podcast is legal advice or creates an attorney-client relationship—it’s all about entertainment, exploration, and empowerment. Let’s make it fun!
Law Have Mercy!
From Courtroom to Boardroom: Jude David's Journey to Mergers and Mastery of Business Acquisitions
This episode's guest, Jude David, is Partner & Vice President of Mergers & Acquisitions at Final Ascent (view on LinkedIn), Chief Executive Officer at Kin Capital Partners (view on LinkedIn) and Executive Chairman at Stately Doors & Windows (view on LinkedIn). You can connect with Jude via any of these channels or on his own social media platforms, including LinkedIn.
When Jude David swapped the legal courtroom for the boardroom of mergers and acquisitions, he didn't just leave behind a career—he embarked on a quest for passion and purpose. This episode features a heartfelt conversation with Jude, where he peels back the curtain on the burnout and compassion fatigue inherent in law, and how a poignant personal loss propelled him toward his true love of deal-making. His story isn't just about change; it's a testament to the courage required to chase what truly ignites your spirit.
Venturing into the mechanics of preparing a business for sale, we traverse the landscape of strategic exits with the expertise of Final Ascent. We discuss the art of enhancing a company's appeal to potential buyers through sophisticated systems and independent operations. The common myths about new management inefficiencies are debunked, and the significance of strong referrals in the consulting world gets its due spotlight. Whether it's luxury construction materials or professional practices, we reveal why some industries attract keen eyes from private equity firms.
Tying it all together, Chaz and Jude delve into the nuance of company culture and the how-to’s of strategic hiring that can make or break post-acquisition success, sharing some hard-earned wisdom on the importance of loyalty and the challenges posed by generational differences in the workforce. They also touch on why localizing authority at various locations can foster a thriving company culture. From discussing the Daily 300 to why Lafayette is more than just a cost-effective location for back-office operations, they leave no stone unturned in this journey through the intricacies of burnout, business growth and sustainability. Tune in to discover how these insights could shape your business's future and don't forget to subscribe & follow to be among the first notified each time we drop a new episode of Law Have Mercy!
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This show is co-produced by Carter Simoneaux of AcadianaCasts Network, Chaz H. Roberts of Chaz Roberts Law and Kayli Guidry Bonin of Beau The Agency, and Laith Alferahin.
Hey guys, chaz with Law, have Mercy. On today's episode I bring on Jude David. He is a lawyer but he no longer practices. He talks about compassion, fatigue and the stress of practicing law, but he left that to pursue his passion. Now he helps business owners sell their business and he's into mergers and acquisitions and all kinds of cool stuff full of tips. Hang around, jude. Thanks for being here, man.
Speaker 2:Yeah, thanks for having me, Chaz.
Speaker 1:Awesome. Well, we're going to talk about all kinds of cool stuff with mergers and acquisitions, investment banking, private equity, and I'm really interested in the fact that you were a lawyer in your previous life and I guess you're still technically a lawyer, but just maybe not a practicing lawyer.
Speaker 2:Yeah, not licensed any longer Certainly something I have to explain to my clients. I used to be a lawyer, have a lot of that knowledge, but I don't do that anymore. Definitely enjoyed making the transition, not having billable hours anymore, though.
Speaker 1:So you came from a legal family.
Speaker 2:I did so. My dad was a lawyer, owned a firm called Broussard David that eventually became Broussard David and Daigle, which is kind of funny because my brother also started a law firm called Broussard and David. That's now Broussard David and Morrow.
Speaker 1:Okay, so that's two separate firms.
Speaker 2:Totally separate firms. To further complicate it, my brother uses the same office building that my dad did, so it seems like just a continuation family legacy. So it seems like just a continuation family legacy.
Speaker 1:Okay, and so you grew up with a dad who was a lawyer, and so you said I'm going to go to law school.
Speaker 2:Yeah, it sounds so much better than it is.
Speaker 1:Yeah.
Speaker 2:You always think, oh, I'm going to be a lawyer, I'm going to aspire to that, and you become a lawyer and you go oh my gosh, everybody expects everything of you, yeah, and so you did practice law for a period of time.
Speaker 2:I did Yep, so uh, started in 2012,. Uh, worked for Perrette Doeys. You know, Hank Perrette and Dennis Doeys they're they're two of the Titans in the industry. Uh, definitely some of the best corporate minds I've ever. Ever met. Learned so much from them. Uh, you know, what was great is they were in the twilight of their careers and you know, and they trusted me to be their number three and that was a lot of responsibility, a lot of opportunity to learn, and so you had some success in the industry.
Speaker 2:Yeah. So I very quickly carved out a niche for myself doing mergers and acquisitions. I was a general corporate lawyer and we help people start their companies, help people grow their companies. But the biggest thing I like to focus on was how do we plan the right exit for our clients. Although whenever you're a lawyer you know usually they try to bake a deal themselves and come to you and say, here, do the paperwork on it, it's not not quite as much of a holistic approach that I eventually got into.
Speaker 1:Yeah, and so what? What about practicing law didn't you like? Or what made you ultimately decide to leave?
Speaker 2:Well, you know, like a lot of lawyers, I went through a period of burnout at some point. We did so many transactions in the early days as oil was really good and then oil started to fall in 2014. A lot of service companies. We did some stuff in health care and other industries as well. But, being in South Louisiana, you're always going to have a lot of oil field transactions and I worked really long hours, you know, push really hard, burn the candle at both ends a lot and I eventually suffered from something called compassion fatigue. You know it's something that really affects a lot of people who are counselors and doctors and that sort of thing. Whenever you have so many traumatic situations that present over and over and over again and you're the advocate for the people going through those, you can start to carry a lot of empathy and take on a lot of those challenges as your own. So it's something I did. I was always a really empathetic lawyer, really good at um, you know, advising my clients. Uh, in back in my law days, I had several clients that just called every single day when they had nothing on their mind, legal, legal, wise. They just they needed to talk to their counselor that day and I was that guy. So, uh, it could start to weigh on you after time.
Speaker 2:Um, and then, you know, ultimately got to 2016,. You know, experiencing a little bit of that. Uh, my closest friend committed suicide and it's one of those. It hit me incredibly hard. But it's one of those moments in life where you stop and kind of examine okay, what was he going through in his life? What am I going through in my life? That tells me, you know, maybe I need to rethink what I'm doing a little bit. And when I went through that experience, I said well, you know, if I could do anything, would I be sitting in this desk chair every single day, you know, 7am till seven at night, trying to crank out work for clients, or would I be doing something different? And I realized, gosh, I'm not passionate about, you know, pushing legal papers. I'm passionate about the deals and the companies that we're helping to build. So how about I get into business doing that for myself?
Speaker 1:Yeah, that's awesome. I I can definitely relate to the compassion fatigue. I'm a personal injury lawyer and, um, so you know I have, I have great empathy. Well, not only from what they're going through, but like their position. Right, you're sitting at home, you're hurting, you maybe don't have a job because you can't go to work and you're like, well, let's see what Chaz is up to, let's see if there's any progress in my case, and I have to make time and I have to be understanding and it really doesn't matter what's going on in my life, right, because I'm their lawyer, I was hired to do a job and I want to be the best lawyer I possibly can, and so oftentimes I find myself in that. You know they call lawyers counselors as well. I find myself in that counseling role and so I can definitely relate to the compassion fatigue.
Speaker 2:Yeah, absolutely. I'm in awe of you guys. Honestly. You handle so many cases at the same time and being able to turn it on for every single client and empathize with one and then five minutes later, talk to the next client and the next one. It's unbelievable. At any given time in my corporate practice you know I was handling 15 or 20 matters, but I know you guys handle far north of that.
Speaker 1:Yeah, we were at the playground one time and there was four swings and I was pushing four kids at one time. I said, beth, get a video of this. This is what practicing law is like, you know, just keeping all the swings moving or spinning plates. You know it's like this. One needs some love. It's almost about to drop.
Speaker 1:spin it, spin it, spin it and that's like every single day right all year long, and then you know if you, if you, if you're good at what you do, you'll get more yeah, right, and there's no such thing as vacation either.
Speaker 2:Like you go out of the country, you're gonna be on the phone or on the computer or whatever, and that's just part of life well, and so you.
Speaker 1:You were more. You found yourself. You had this epiphany once your friend passed away and said life is short, essentially, and I'm going to do what I want to do. And so it's not that you didn't like the mergers acquisitions. On the contrary, you actually love the mergers acquisitions. You just wanted to be part of the deal and not the paperwork dealing with the deal.
Speaker 2:Yes, exactly so, one of the challenges I always had.
Speaker 2:You know, whenever you're the lawyer and you're sitting at the end of a chain, you know people have found their buyer, they've baked up the deal they want to do and they want you to put together the paperwork.
Speaker 2:They hand you a pile of chicken crap and tell you to turn it into chicken salad and you know there's many times that you say, gosh, if you'd done this differently, you'd done that differently, you'd done that differently, you'd have a much better transaction here, a much better outcome after the fact. And that's what I was able to do. I was able to take all that experience of seeing the things that went well and the things that went wrong, the things that could have been done better, and so I expanded and said we're going to start all the way back at the beginning of the process. We're going to help people to get their business ready to sell it. We're going to take them to market, find the right buyer. We're going to make the right deal. We're going to get it into legal, get it closed. Much more holistic approach allows me to work with fewer clients at the same time, really focus on getting things right for them.
Speaker 1:When you were doing the mergers and acquisitions at a law firm in the early days, you talked about oil fill companies and maybe some healthcare companies. What was it about oil fill like service companies probably, specifically that there's a lot of mergers and acquisitions. What is it about that industry that there was always that type of action?
Speaker 2:Well, you know, I don't know if it's the industry, necessarily it's just that we had so many of them. If you drive down Highway 90 in Lafayette, it's just one building after the next that either is a service company or used to be a service company. And, uh, you know, going from 2012 to 2014, that stretch oil was the most expensive it's ever been, and so all of those businesses had really good margins, at least for that moment in time, and it was a really great, great opportunity for those people to exit.
Speaker 1:To exit right. So you build it up and get it to a point when the timing's right, look at an exit, and so the mom and pop shop finally gets their big windfall.
Speaker 2:Yeah, and that's what I try to tell people all the time. Whenever I talk to them about their businesses today, they call in and say, well, why would I want to sell right now? Business is the best it's ever been, you know, in the history of my life. You go, yeah, well, it's not going to stay that way forever, so why not try to sell when you're at the peak? People buy businesses based on profitability. You know, ultimately you're going to get a multiple of your earnings, and why not sell whenever those earnings are the absolute best they've ever been?
Speaker 1:Tell me about your company, Final Ascent.
Speaker 2:Yeah, so founded in 2017, I've got two business partners there. It's a holistic approach. It's kind of what I'm describing, so we've got a consulting side of the business where we help business owners to think about their exit, and they might be two, three, four or five years away from exiting their business, but they just have that on their minds my business must be worth something. There must be some buyer that's going to want to buy it someday, and we say, great, let's start working now to build the business that a buyer is going to want to buy, because you think about it very differently when you own a business and you run it for yourself, versus whenever you're looking at a business to buy. Buyers are very focused on EBITDA. They want to see those earnings numbers that are the highest that they can be. They want to make sure that the owner is not necessary to the business. They've taken themselves out of the business and found a management team that can really run things day to day. They also like really sophisticated accounting and back office as well.
Speaker 2:Whenever you're a business owner, though, and you're thinking how do I make my business the most profitable it can be for me? You're thinking well, I need to do as much as I can. I don't need other people in high salary roles doing all the different jobs in the business. Well, I don't need to pay a lot for back office. That's just a waste of money. It doesn't generate any money in the back office of the business, that sort of stuff.
Speaker 2:And so we sit with business owners and say, okay, what business does a buyer want to buy in this industry? And let's build a business plan to turn your business from that, from what it is today, into that three or four years from now. And that way you know, if you have time to execute on it, you can really get your business into shape so that a buyer want to buy it when the time comes. You know it's, it's. You can think about anything that you, you buy and sell in life. You know if you have a house that's a bit run down or that's, you know, too customized for the way you want to live in it, buyers aren't going to want to buy it. But what can we do? We can. We can put a little lipstick on the pig, remodel it a little bit, get it into the shape so it's what a buyer will want to buy and it'll make you a lot more successful eventually.
Speaker 1:I've heard the quote that to replace an owner of a business who is an active manager in a business, it usually takes three employees to replace one guy and they're only 80% effective. Yeah, Is that true?
Speaker 2:Well, yes and no, I think you have a short-term versus a long-term bias there, and so, if you find the right people to replace you as an owner, usually your business can go a lot farther than it ever could have whenever you were at the center of it. In the short term, though, you've got so many plates spinning up in the air all at the same time, you're not going to find one person to jump in and take it all over, and that's why time is so important in this process. That's why I don't say if you're thinking about selling your company six months from now, come talk to us and we'll help you plan this out. It's really not going to work. You need to spend a little bit of time thinking through your exit and getting it ready and finding shape, and then you know you kind of need some time to let those financials play out under the new management scenario.
Speaker 1:So what's the process? Does the potential business owner contact you or do you look for potential targets? Yes, okay, all right.
Speaker 2:We do it every which way. We've got outbound marketing that finds you know businesses out in the world or draws business owners in for us. We do have some cold calling efforts where we identify businesses that are a really good fit and we reach out to them directly. But the best source of business in any business that you have is always going to be referrals. There's a lot of folks I've worked with in the past and they're always kind enough to send really good work our way.
Speaker 1:What's the ideal business that would fit in kind of this scenario, where they should maybe consider a sellout with some pieces that could be put in place to add value?
Speaker 2:Yeah, so for us. I mean, we're talking about mid-market businesses, so we're not really particular to an industry. I call us industry agnostic, but we know what we don't want to sell and that's almost always what we're talking about right now, which is owner concentration. If your business is, step away from the business for a month and things keep functioning right, you know it's not the kind of business somebody is really going to want to buy, or at least they won't want to pay top dollar for it.
Speaker 2:So I can't interest you in Chaz Roberts law you know, I bet we could find a buyer for it, but it might not be what you want to get.
Speaker 1:Right, it's too, it's too essential to me, essentially.
Speaker 2:Yeah, that that's a challenge and law firms can sell. It's not like you can't sell a law firm, but if you have a law firm that's built around one lawyer and the reputation of that one lawyer, it's really hard to sell. If you build a law, make me as satisfied as it is to help people honestly.
Speaker 1:But there is a movement nationwide I don't know if it's legal in Louisiana where private equity is actually getting into the legal space and that's presenting. We go to conferences. They talk about it Like you guys got to be careful. Private equity is coming in, but I think the realities of the industry are going to pose significant issues.
Speaker 2:Yeah, people are rolling up every kind of industry you can think of.
Speaker 2:Yeah, I heard veterinary, oh yeah, yeah, veterinary practices, all kinds of doctor practices. It's amazing you have single practitioner doctor practices that are being bought up by private equity, and so you might have a dermatology practice or a family general practice or whatever it is, and private equity is going to come in and buy 60% of that business and they're going to split revenue with you. But you have to keep operating in that business because they don't know anything about medicine, they just know numbers.
Speaker 1:Right, but you know we were talking yesterday and you were telling me about the construction industry and construction materials, I guess, and I thought that was fascinating. Can you explain why you've sort of kind of focused at least part of your business on construction materials?
Speaker 2:Yep. So I always knew I wanted to be on the buy side as well, and so I have a real passion for helping business owners to find the right exit. But I also think a lot like a buyer. So I knew I wanted to get on the buy side. So I formed a whole separate company called Ken Capital Partners and we acquire door and window manufacturers, some architectural millwork manufacturers as well. It seemed like a really good industry to get into.
Speaker 2:Just evaluating what's out there, as a buyer you try to think in terms of well, I don't want to go buy what everyone else is buying necessarily. It's really funny the way that happens. Usually, whenever you see a roll-up starting a roll-up being a plan to acquire similar businesses and sell them as a whole, you see those happening for one firm and then there's always piggybacks happening right afterwards. There's four firms buying air conditioning companies and one buying excavation companies, and then four other firms are jumping in and doing it. Well, you don't want to be the fourth firm in that chain buying in that particular industry, because now the multiples are insane. You got a lot of firms competing on every deal. So that's kind of a preliminary starting point. What's an industry that's not being rolled up right now, what's something that has some challenges. So you're looking for a lot of fragmented ownership, a lot of small mom and pop type shops that have grown. You know, businesses will grow to a certain ceiling with a mom and pop owner and then they need a level of sophistication to get beyond that. And millwork businesses really seem to fit that mold for us. You know so. In the past you know, people have bought doors and windows by going to a distributor and then that distributor is placing orders with a manufacturer to try to fulfill that.
Speaker 2:Well, whenever you go and look at your high-end custom stuff, you got a whole lot of little small mom-and-pop manufacturers all over the place and none of them are selling direct-to-consumer, direct-to-builder, direct-to-architecture designer. They're going to a distributor. Yep, they're selling to a distributor. And what happens there is you get a lot more commoditized products. So all these mom-and-pops are really set up to be able to build beautiful custom products.
Speaker 2:You got mill workers that are artisans. They take a lot of pride in their work. They can build one of a kind works of art, but a distributor doesn't care about that. A distributor cares about getting the lowest price they can for that end consumer. And so, really, you got all these small shops that are getting beaten down in terms of what can we build? How much can we turn it into a production facility instead of a custom shop? And so we identified that and said we're going to go the exact opposite way. How about we start acquiring these mom and pop shops but create a purely custom solution? What does that mean? It's totally on the high end. I mean we're talking luxury and ultra luxury homes. Uh, you know customers that want something that they designed from scratch.
Speaker 1:One-off, one-off type doors.
Speaker 2:Exactly it's. You know, we might want African zebra wood and we want it to function in this particular way that it opens like no other door in the world has opened. Uh, you know, we've even done some really cool stuff, like entire walls that sink into the basement so that you can walk, you know, inside to outside and, and you know there's no distinction, you just walk on a level ground. Uh, you know all kinds of cantilevering stuff and you name it. We can do it Cool. Which is really cool, that's the full use of those artisan mom and pop type shops. You know how about we think outside of the box and build something remarkable in an industry where they were getting beaten down into more commoditized products.
Speaker 1:Because they were limited to just their geographical area. One-off builds and it's tough to stop the whole production. With guaranteed buys from a distribution to build one African zebra door, yes, but if you have several orders coming across the country, then they can do these one-off deals.
Speaker 2:Every shop that we buy, their version of sales is they're waiting at a desk, waiting for the phone to ring from the distributor, with the distributor saying here's what we need today.
Speaker 1:Yeah.
Speaker 2:And you know how low can you go on the price? Because I'm sending it to three or four other shops to see what their price would be as well, and so I mean, you really get beaten down. You say, well, it's not a product I really wanted to build, there's no creativity to it and all they really care about is the lowest price. So quality kind of goes by the wayside. We approach it the opposite way. We're out there nationwide, you know, building relationships with builders, architects and designers who are building some of the nation's finest homes, and we're figuring out how to plug and play our shops. You know all these artisans uh, get them to build something truly remarkable.
Speaker 2:How did you come up with this? Well, um, you know, I'd love to say that. You know that we had a brilliant plan from the beginning, but we didn't. So we started out, had one business that we wanted to acquire in Dallas that was an iron and steel business, and another one in Atlanta that was a custom wood business. And we said, well, surely if somebody's buying iron doors, they'll want to buy wood, and if somebody's buying wood doors they'll want to buy iron. So we are two brilliant guys that are going to put together these two businesses. Nobody's ever thought of that before, um, and it was so challenging, I mean, it was unbelievably, unbelievably difficult. Um, in fact, I got such an education right out of the gate in terms of, well, you sell wood doors and iron doors totally differently. They, you know it's. It's like apples and oranges, uh. And also, you want to move products back and forth from Dallas to Atlanta. Well, where's all the infrastructure to do that? And whatever.
Speaker 2:And uh, we learned very quickly that, hey, if, if you want to do that kind of platform, it has to be a whole lot bigger, a whole lot more sophisticated. Uh, but we started having really good conversations with builders, architects and designers about what it is that they're looking for, and they're the ones that told us why the supply chain is just broken going through distribution. And as we heard that refrain 8, 10, 12 times, we started to say, aha, that's it. We need to build a nationwide platform that can do this. You know, direct to builder, architect and designer. You know consultative, design, manufacturing, delivery, install, white glove, service, maintenance after the fact, the whole nine for those customers. And if you look across the South, we're the only company that does it. And, uh, you know we're we're actively working to expand that footprint even further.
Speaker 1:And so you had to build the infrastructure to get all these people on board, because no single company could do that on their own.
Speaker 2:Exactly, and it is time consuming and expensive. You hope that your P&L looks really rock solid year after year, but the truth is that happens if you stay stagnant and you don't allow your business to grow.
Speaker 1:If you stay stagnant and you don't allow your business to grow. If you really push your business and try to grow very aggressively, your P&L is going to have a lot of ups and downs as you're, as you're spending a lot of money trying to grow it. So are you currently looking for other wood shops and or steel jobs to add to the portfolio to help with this?
Speaker 2:Yes, I'm under a letter of intent to acquire four this year. Wow, so we move very fast. We're very active in the space. We're getting to a size that you know capital is always a challenge. So I have a lot, of, a lot of banking conversations I'm doing this day at these days about how, you know, we get to that next level in terms of financing transactions. But you know, we are a small kind of family-owned, owner-operated business ourselves. We've never taken outside investment, so we really don't have a lot of interest in doing that either. We like operating the way we do. We just need to put the pieces together.
Speaker 1:So you're building this huge project, but you're also looking at other individual businesses to assist them with some type of buyout as well.
Speaker 2:Yeah, two totally separate teams.
Speaker 1:Yeah, how do you find the time to do all this?
Speaker 2:Yeah, Well, on top of that I've got six kids. I'm busy all the time, but if you don't sleep it's easy to get everything done. That helps, it helps.
Speaker 1:That helps. I have two and I can't I mean, I can only imagine six kids.
Speaker 2:Yeah, Well, it's a lot of fun. I really enjoy every aspect of what I do and you know that's how you know you've done something right in life. When I was sitting at the law office every day, I just you know I felt like I was going through the motions. And I was going through the motions and I was really just grinding to make sure I was making a living for my family. Uh, I get so excited getting up every day doing what I do. Um, I love assisting business owners, which is why I still do that. Obviously, the the door and window business has really taken off. It's doing really well. Um, you know, don't have a lot of need to assist business owners any longer, but I've got a great team and a great process in what we do. I really enjoy doing it, so I'm going to keep doing it in the future.
Speaker 1:What other types of industries do you think could benefit from this type of operation?
Speaker 2:You're talking about the kind of roll-up that we're doing.
Speaker 2:Oh my goodness, there's so many. Yeah, but what you'll find and it's what we were just talking about with law firms and doctor's practices, we were just talking about with law firms and doctors practices and whatever else there's very few that are left that nobody's touching, and so you're going to find the ones that are more owner-centric, which mill workshops tend to be. They tend to have somebody that's sitting at the top who's very involved in the business. Those are ones that private equity hasn't touched yet.
Speaker 1:I almost think I told you my story about the renovation, the like in the cabinet manufacturer. Example, the guy that builds my cat, he's got some artisans but he's almost like a circus ringleader, Like he's unorganized, kind of bounces from one job to the next and the guys are kind of high maintenance in the shop and it's like he's spinning plates too. 100%. Is that common? I would imagine that's pretty common in the cabinet industry too.
Speaker 2:Yeah, so when you're finding millwork businesses, you're not finding a lot of them who have gotten to a level of sophistication where they've got levels of management and ERP systems and all that he's putting together the invoice himself, yep, and it might be six weeks after the job's done. Yeah, you talk to Bob who owns the millwork business. Bob is sales, bob is accounting, bob is invoicing.
Speaker 1:Supervisor.
Speaker 2:Yeah, it's whatever job. That is a white collar job in that business, that's Bob, and then some of the blue collar jobs too.
Speaker 1:Bob hung my curtain rods because Jim didn't show up for work too.
Speaker 2:That's exactly right. Bob fills whatever need there is.
Speaker 1:So have you identified any? I mean, do you think it's all in the construction industry, that that would be some type of? Because I guess the construction industry would have shops and tools and artisans and qualified workers, but maybe that guy wants to get out and it really isn't as owner-centric. Someone else could come in and step in and supervise those guys and put together the processes.
Speaker 2:Yeah, it's easier than it sounds. I will tell you. I always have beautiful business plans about how we're going to buy a business and integrate it. It's like what Mike Tyson said everybody has a plan, so they get punched in the face. I feel like every time you do an acquisition you get punched in the face. You have to underwrite that risk in your own mind. You have to make sure you're buying right on the front end. I always say that if you can buy for three times EBITDA in a business, you have a lot more room to work than if you bought for six times EBITDA. So make sure you're making the right deal on the front end and you have a lot of room to make some mistakes and grow.
Speaker 1:We bought a business and Laith was integral in it and he took a box of receipts and a box of leases and made it look somewhat like a business. I mean, that's probably not uncommon right. And they had side deals with this guy and side deals with that guy and this there was an exception to the exception on this one, and there's all these little things, and then we didn't really figure out what was going on until probably four months into owning the business.
Speaker 2:As to the whole picture, yeah, well, if you're willing to go on the smaller end of the side, there's so many companies available to buy out in the world. When you think about traditional private equity, they like to buy businesses that are in the mid market and they get really excited about businesses that have at least $10 million of net earnings. So that might be a business that's $60, $70 million of revenue, $10 million net, and there's a level of sophistication in those businesses. I mean, you've worked through ERP implementations, you've worked through building a management team, you got sophisticated accounting. You're probably getting audited every year at that point, and so a buyer can come in and look at those businesses and feel very confident in the processes and the procedures and the accounting and whatever else.
Speaker 2:Something that we've done which not a lot of private equity does is go a little bit lower on the spectrum. Mom and pop millwork businesses are never going to be 50 or 60 million dollars as long as they're a mom and pop. They need somebody to come in and add sophistication to what they're doing, and so that's what we're doing. We're putting together a lot of these little pieces and we're adding sophistication behind the scenes.
Speaker 1:Do you actually go out and find managers or any of the front office people that can help with the particular businesses, any of the front office people that can help with the particular businesses?
Speaker 2:We do so we are knuckle deep with our hands and everything that we do. How?
Speaker 1:do you find these?
Speaker 2:people. Well, so interesting story. I, I, I love reading. I read a lot of books and I feel like every time I read a management book or a private equity book or whatever you know, I pull out one little piece of it.
Speaker 2:Maybe it's not even what the book was about, but, um, I remember reading a book called the hard thing about hard things, um, back when we first started this, uh, and that was by Ben Horowitz, from Anderson Horowitz, and one of the things he described the book was about either the VC world uh, out in Silicon Valley and all these tech companies and how fast they grow and whatever else.
Speaker 2:And I knew we wanted to be a business that grew that fast, even though we're in a non-traditional industry for growing that fast. And something he described in the book was, you know, every tech company that starts out in Silicon Valley, the first five or six hires the founder hires himself, and then the sixth or seventh hire is a recruiter and it's really interesting an in-house recruiter being one of the very first people that you hire. But if you know you're going to grow that fast, you put a real emphasis on HR, and not just HR as a function, but what's our culture going to be in this organization, and not just HR as a function, but what's our culture going to be in?
Speaker 2:this organization, and so that was really important to us early along. Both you know a solid HR function and an in-house recruiter to make sure we're out there finding the right people, calling on other businesses and finding the right people that are already in the right jobs and convincing them to come work for us. But, more importantly, inside of our organization, how do we build a culture of people that want to work here? And my initial thought was I want us to have a business that's the last place that people work. If you're in your 30s, I want to present a path to you that you say I want to stay at this company until retirement.
Speaker 1:Which is tough in this day and age.
Speaker 2:Yeah, companies don't do that anymore. Companies think very short term, how do we motivate you for the next year? And uh, in turn, because employees don't feel a lot of love from the company they work for. They job hop a whole lot, uh. And so we like to look for people that don't have a lot of that job hopping and they're in their resume. We like people that have had a little bit longer tenure with the companies they've worked for, because I want to present them something where they can realize wait, this company is really loyal to me. I want to be loyal to the company in return.
Speaker 2:And you know a challenge of acquiring businesses. You inherit a lot of people too in those acquisitions, some of which aren't the right fit. We're not a private equity group that comes in and buys companies and starts laying people off. In fact, we buy and build. We buy and immediately start hiring right after the acquisition. But you're going to find out over time. You know Susie over there isn't the right fit, right she's. You know she says things like well, this is the way we've always done it. Right, we shouldn't have to change what we do. We shouldn't this, we should. And so you go. Okay, susie, well, like we're going to, we're going to give you the gift of helping you to use your talent somewhere else, right?
Speaker 1:So if, if you had a small business 10 employees your advice. If there's a business of 10 employees, small business what could you do today to add value to your business, to make it more attractive to a potential buyer?
Speaker 2:Yep. So you know there's a certain size element to businesses that that buyers want to buy. Uh, and I've sold some businesses in the past that were five or six employees but they made $15 million of EBITDA. And if you can have the right niche there where you can figure out how to be very profitable at a small size, we can make your business very attractive to a buyer. If you were 10 employees and you're barely breaking even, you got to build a plan of something that's really repeatable and scalable, that somebody's going to be excited to buy, and it needs to be profitable because people buy businesses, because they want to buy into a profit stream. If you're doing something that is very capital intensive and you can't scale it, it's going to be really hard for somebody to buy it and think about growing it, and so what people like to see is low inputs going into a business with a lot of output, and by output I mean, you know, net profit dollars.
Speaker 1:And what would be an example of that?
Speaker 2:Well, that's why people are so attracted to tech industries. That's the classic example, because whenever you have software as a service type businesses, you know all these platforms that you build and you get subscribers. You put a lot of investment upfront into the platform, but every additional subscriber costs nothing or very little, and so you know that's why those have been, you know, so incredibly overinflated, in my opinion, on their multiples. I mean, if you look at Uber, uber made their first profit this year, but they're worth $120 billion. Why is that? Because they've got all these users and these users want to keep using the platform over time and there's not a lot of additional cost for Uber as they acquire more customers and so they're able to incrementally edge the prices up and make more profit as a business, which is what they've finally done this year. But, to be fair, uber has lost $70 billion. Getting to where it is today and you know it's hard to fathom a business has lost 70 billion dollars and they're worth 120 billion. I was.
Speaker 1:I had a walking software company, cupid, here before you and if you think about it, he makes the song. The CD is very cheap to sell after that right labor-intensive on the front end and then the digital download the CD very cheap on the back end. Yeah absolutely, and that's why people probably look to buy music catalogs too. Same idea.
Speaker 2:Yeah, well, it's the same thing we're doing on the door and window businesses. So when we're buying a business that's selling through distribution and they're selling at very low margins because they don't know how to break out of this cycle, they're selling to the people that want to buy their doors and they're selling for the best price they can get from them at that price point. But we come in and think well, with a little bit of investment we can sell these to different customers. We can sell a little bit different product to a little bit different customer, but we can make twice as much margin. And that's what you, as a buyer, start to think. Maybe as a business owner, you weren't thinking that it's how do I sell more to these same distributors? But as a buyer, I'm thinking well, how can I create synergies with my existing business? How can I make two plus two equals seven, not two plus two equals four?
Speaker 1:Jude, you were talking about earlier how you want people to work forever essentially for the company, their entire career for a company In 2024, what do you think motivates employees?
Speaker 2:Well, that's really a tough question, because the generational divide, you know, I find that a lot of my very best workers tend to be 50 plus. That's not necessarily because young people don't want to work, but although I do think there's a real generational divide, you know, folks of that generation tend to, you know, be nose to the grindstone I work harder, I'll be more successful types, and they also, you know, know what it was like whenever companies had loyalty to employees. You know, they grew up in that generation, and so I think, for those folks, they want to see us hearkening back to the days of old. You know company, family, culture, you know you're going to work here until you retire, that sort of thing, and that really fits our mold. You know, we've got a lot of mill workers that fit into that older category. As you move younger and younger, I mean, you see a lot of different things that motivate people, and I try not to think about people as a group. I try to think about them individually. I think what's most important, though, for young folks in the workforce today, is that they feel like the company cares about them, and so we've instituted a lot of processes and procedures to make sure you do that, and whenever you're really small, it's easy to have all these little one-on-one conversations and make sure that people feel cared about. We're about to be 400 employees. Well, when you get to that size, you have to have some institutional processes and you know a company culture built around it, and so you know we put a lot of check-ins in place and you know feedback in place, so that we're constantly getting feedback from our employees to try to understand what motivates them, what keeps them excited, what parts of the job they like, what parts of the job they don't like.
Speaker 2:I think, as an organization, it really matters too that we find ways to get people to feel ownership in their work. I think people feel better whenever they feel like they own what they're doing. Uh, I think a lot of people don't know how to do that, and so it's my job as their employer to help them figure that out. How can you own this a little bit better? And you know you're doing a good job? If people walk through the showroom and they see a piece of trash and they've been down and pick it up? Um, you know if, if you see people saying, oh, somebody else will get that. You know this is not my place, not my job, whatever that's when you know you're failing on company culture.
Speaker 1:And you manage all these employees out of Lafayette.
Speaker 2:Well, thank goodness I don't manage all those Right. Maybe that's bad, but the back off.
Speaker 1:Yeah, bad, bad, bad terminology there, because you know the management of each particular shop. That's a whole different challenge because, as you were saying, you try to do it at the individual level. Well, you're going to have different little subcultures in each particular facility too that you're going to have to deal with, right? Yeah, so Mardi Gras is not as important in Dallas, texas, as it is in New Orleans, for example. I mean, you have all these different variations.
Speaker 2:Yeah, with all the different locations we have, we've got that challenge galore. I mean, it's all these different individual locations that have individual general managers and there's different things that are important to different people. So a couple of different ways you can focus on that One you really have to motivate the general managers at each location to focus on what's important to their people and so you give them P&L responsibility so that they are responsible for making their division profitable, but they're focusing on the individual needs of those employees. We've tried it top down. We've tried to do the. We're going to manage from one site far, far away and we're going to tell you what's good to you. No-transcript. Nobody likes it, nobody likes that approach. Uh, and so the more you can decentralize and push that responsibility down, the better.
Speaker 2:It is culture wise, although there's a lot of things we can do as an organization that get people bought in. I mean, obviously we've got all the swag and all the, all the things that you know kind of make people feel a part of the team. Everybody has, you know, their kind of, their daily gear that they use that's stately related. We've got daily check-in meetings company-wide. They're called the Daily 300. It's a five minute meeting, but it's the entire company hopping on all at once and we're going to talk about one little important thing, one little tidbit that we can tell everybody today, but everybody's able to go back and start talking about it in their own organization. You know, spread all around the country, because we all had, you know, five minutes together in the day.
Speaker 2:Um, you know, it's really important that everybody knows where we're going as a company. Uh, you know, because if you're running a millwork shop in Atlanta where you build doors out of mahogany, and then we're doing high-end steel in Dallas and then they're doing high-volume doors out in Las Vegas so those are some of our facilities it's very easy to think that the whole company is what you're doing in that facility. And we have quarterly meetings where we get the whole company on for a couple of hours at a time to really walk them through where we were as a company, how we've grown in the last quarter, where we're going next, and really help everybody to feel like they're a part of something big, not part of just what their little function is in their organization.
Speaker 1:Why is Lafayette such a attractive place for you to have the back office?
Speaker 2:Well, I live here. So that was, that was part number one. Uh, I live in Lafayette lives here.
Speaker 2:I'm always going to live here. Uh love, uh love. Our community in Lafayette and my family's from here have a lot of family that still lives here. So, uh, that was part number one I'm going to live here and I'd like to travel less. So that was kind of how things started for me, although as I started to think about it and look into it, I realized we operate in a lot of cities, some of them very expensive to operate in, some of them less expensive to operate in.
Speaker 1:And like, for example, dallas, would be one of them.
Speaker 2:Yep, so Stately's headquarters is in Dallas. It's a very expensive place, but, but, you know, inexpensive by comparison to some of the California locations. Uh, and you, you can always find something a little bit further and further up the scale and you start to realize, gosh, you know HR, you know it's gotta be located somewhere, but it can't be located everywhere, because you know, when you got seven, seven locations spread across the country, we have to put an HR person somewhere, we have to put a general counsel somewhere and the accounting people and we have to put all the different functions and all of these white collar jobs. We have that talent right here in Lafayette, louisiana. We've got great universities that are pumping out really smart young folks.
Speaker 2:We've got some bigger companies that have really good talent that come out of there as well, and so we've hired from other companies. We have a lot of people that were in the oil field and want to be out of the oil field, and so we've picked up a lot of those folks too. And so Lafayette's a perfect place in my opinion, not just because I sit here, but because it's a smaller town but with a really strong white collar pool of talent to pull from. That you can build a back office and really plug in all of those functions in a lower cost market, but you know they're operating on Teams or Zoom or whatever it is with all the other locations, you know, and it's just like they're sitting in any one of our shops.
Speaker 1:Do you think that it's kind of a secret now? I mean, do you think that eventually in the next five to 10 years, other companies will potentially relocate here?
Speaker 2:Well here, and probably some other smaller communities as well. So I mean, you're looking for a town that's got really good university and a lot of talent coming out, you know, in accounting and some of those back office functions. So Lafayette's definitely not the only one, but we're a great example of it. It's a great place to live really good quality of life here, but a much lower price point. So I think if companies aren't thinking about it, they should be. I think the bigger companies get, the slower they are to change, and so we were very fortunate that we started in the height of COVID. The idea came to buy these businesses in April of 2020. We started thinking about it in March of 2020 as everybody went on lockdown in their own houses, and it really percolated into April when we decided we're going to start Ken Capital Partners and we're going to start acquiring door and window companies. At that moment, the rest of the world was saying you know, put a pause on mergers and acquisitions.
Speaker 2:There's really no reason to think about buying companies. There's too much uncertainty. And we were sitting back thinking, well, what a great opportunity. Where nobody else wants to buy, we can be the the two crazy idiots who are buying. And uh, and that's what we did. And because we grew in that uncertainty, it allowed us to think very differently about the way we built the business, and one of those ways was thinking about locating outside of your, your big markets.
Speaker 1:If you could speak to business owners who may be considering, or should consider, uh, selling what's your, what's your pitch?
Speaker 2:Start early. That's the that's the main pitch that I have. Um, you know, before you think it's time, yeah, before you think it's time. That's the biggest challenge that most people have is they wait too late. They wait until they're ready to sell their company and then they start thinking about it. Um, and so that's at least the biggest piece of advice. The biggest pitch I can give you is you want to find somebody with experience in all aspects of M&A to help you as business owners whenever you grow a company.
Speaker 2:What makes you really good at growing your business is thinking you can do absolutely everything, no matter what the new challenge is. I'm going to figure it out, I'm going to roll up my sleeves and I'm going to do it myself, and a lot of business owners get that impression when it comes time to sell their business. Well, I figured everything else else out up until now. I'm going to figure this out too. I'm going to figure out how to sell my company myself, and what I've seen in that process is either they make it unsellable or they leave a lot of money on the table. That's a very common thing for people. So you know whether it's us or it's someone else. You got to find the right advisor to help you through it. What's important there, don't be duped by the bigger groups that tend to come in with a lot of sales guys who are, you know, very eager to really be pushy and push a lot of those tactics that don't really work.
Speaker 2:There's no substitute for experience and it's funny because at different points in my career I thought I had all the M&A experience. When I was practicing law and I was doing all the M&A, I thought, gosh, I've got so much more transaction experience than other people. And then I started the investment bank, representing sellers there, and I said, oh my gosh, I've got a much more holistic approach now. I'm starting from beginning, going all the way to the end, and, even though I've got a lot of transaction experience from my law days, I've learned a whole lot doing it this way.
Speaker 2:Well, then I got on the buy side and I said, oh my gosh, this is a whole different world. I'm learning all the challenges of you know what a buyer really wants and how to get deals done and all the things that are happening behind the scenes. You know when buyers are telling you one thing, what they actually mean is something different, and I think I've seen all the aspects of M&A. Now I mean I'm pretty sure I'm wary to say that because I've said it before but there's no substitute for that experience and if you get the right advisor on your side, who understands how buyers think, who understands what a buyer is trying to accomplish, they can help you to position your company into that. And if you start early, you really put the time in and the effort in to get your business built the right way so that it's built to sell you can do a whole lot better in the end.
Speaker 2:Whenever you're doing that, you got to start really focusing on that EBITDA, because that's the number that's going to matter the most. Ebitda in case people don't understand earnings before interest taxes, depreciation or amortization. So basically, you take your net income, you add back interest taxes, depreciation and amortization. That number matters so much because that's the one they're going to apply multiple to. And whenever you're trying to exit your business, you can't think in terms of, well, I don't want to spend that, you know, $200 on whatever that software is that would make my business more efficient, because $200 out of my pocket is hard. You need to think in terms of, well, what's five times $200? Because that's what the buyer is going to pay for. Whenever you, whenever you put that implementation into place and you know so it it cuts both ways you know every expense matters more, but every dollar you're going to gain matters, matters more to.
Speaker 1:Jude, where can people find you?
Speaker 2:Uh, so go to final ascentcom uh, final ascent.
Speaker 2:Uh it's a mountain climbing term. Uh, if, if you ever heard of um, you know K2 or Everest or one of those. Whenever people climb they get to base camp. You know kind of most of the way up the mountain, but you really need a Sherpa to guide you that last little bit. It's kind of a metaphor we use for business owners. You've been really good at building your business all the way up to base camp, but you really need a guide to help you get to that final ascent and we'll be that guide for you. We'll help you to get your business there. If you're interested in our doors and windows, check out statelycom. I'm not going to tell you how much I paid for that domain. It was insane. Feel free to check us out either one of those places. Drew, thanks for being here.
Speaker 1:Chaz. Thanks so much. All right, appreciate it. Hey, it would mean the world to me if you subscribe to the podcast and leave us a five-star review. It helps keep the show free and it helps us book better guests to provide more valuable content to you. None of the opinions expressed by my guests are that of my own, and nothing we talked about creates an attorney-client relationship or could be construed as legal advice. Hope you enjoy the show. This podcast is powered by Acadiana Cast Network. Go to acadianacastcom for more South Louisiana-sourced content.
