Search Update - March Recap

Close the distance. That’s what I am focused on right now. The opportunity I flagged in February has evolved significantly. For simplicity, I will refer to this deal as Project Cascade going forward. If everything remains on glide-path, I am aiming to be under a letter of intent (LOI—essentially a formal offer with defined terms and a path to closing) in the next two weeks. What I’m working on Since my February update, I’ve received and worked through a detailed batch of granular company data: historic financials, sales by customer, and organizational information. One thing that struck me in this analysis: the individual business units within this company each carry their own risks, but in aggregate, they create a platform with more stability than any single piece would have on its own. While no business is without its risks and challenges, the data suggest that this business is of relatively high quality and I have strong conviction in the deal. I’ve started socializing the deal with lenders, capital advisors, capital partners, and third-party diligence providers. I have primarily used referrals to identify the right members of the deal team. I’ve engaged legal counsel with relevant transaction experience, and I’ve met with two quality of earnings (QoE) providers—essentially the third-party financial auditors who would validate the numbers during due diligence. The goal is to have the right people aligned and ready to move the moment an LOI is signed. Overall, the response has been very encouraging on all fronts—I have yet to encounter a party that doesn’t like the deal. Pipeline health While I am principally focused on advancing Project Cascade, I’m deliberately maintaining the broader pipeline. 24 deals entered the pipeline in March, bringing the cumulative total to roughly 500 since inception. Volume was lower than previous months; that was partly by design. I allocated the preponderance of my time to Project Cascade. Another contributing factor is that, anecdotally, it seems there were fewer on-market deals. Of those that came to market, few met my criteria. Behind Project Cascade, 2 additional proprietary opportunities are developing. One is a residential re-roofing company and the other is a language training services business focused on the military. Both are located in Washington. They are both early stage; however, they are real opportunities with potential. I have continued to be more selective about the deals I advance. Of those that reached CIM (confidential information memorandum) review this month, only about 9% advanced to the next phase of pre-offer diligence. The top pass reasons in March were project-based revenue and valuation expectations. I submitted IOIs on 2 brokered opportunities this month. One is an industrial services franchise and the other, an outsourced administrative services business. My sense is that there is a low probability that either of these progress. The franchise presents a significant valuation gap, and the administrative services business will likely draw intense competition. Regardless, the businesses are of sufficient quality to warrant an initial offer. I’m remaining active while Project Cascade continues to develop. I also moved decisively to kill several deals that had been lingering in a gray zone. No deal is better than a bad one. The most expensive thing in this process is a mediocre deal that consumes weeks of attention before arriving at a conclusion that could have been reached on day two. How you can help (my only ask) If you come across a business in WA or FL that provides essential goods or services and generates $750k–$3mm in EBITDA or pre-tax profit, I’d greatly appreciate an introduction. Thank you for being a part of this journey—your support is deeply appreciated.