SPEAKER_01 0:02

Well, welcome to the Future Ventures podcast. And uh thank you for joining us, Kevin and Kurt. I'm super excited to have you. Kevin, why don't we start off with you? Do a short intro on as to who is Kevin Salquist.

SPEAKER_04 0:15

Uh well, thank you for having me. First off, uh, so Kevin Salquist, I come from the capital markets background where I spent uh the past 30 years doing everything from trading to cap intro to sales trading in capital markets area, was a market maker way back when when you actually had market makers. But uh as things have progressed, um, now in the private equity world, which I'm very thankful for, and I've been a member with Kurt here at Big Seven for the past three and a half, almost four years. And that's my background.

SPEAKER_01 0:54

Thank you, Kevin. Kurt, uh, let's turn it over to you. Tell us a little bit about who is Kurt Winter.

SPEAKER_03 1:01

Yeah, thanks. Thanks, Max, Maxim, uh, for having us. Um, I I come from uh I reached a stage in my career. I would call this the the uh maybe the third, third out of out of four chapters. Um 30-year experience, uh, executive in manufacturing, very proudly, um domestic manufacturing, which um which made me a bit of a unicorn, say back in the in the roaring uh offshore days of the uh you know 90s and and early 2000s. Um basic, I mean I love uh I love basic manufacturing, things that um businesses to businesses that they need, whether it's a replacement part, replacement gear, uh, you know, a gasket, or those are wonderful, wonderful businesses to me because um and we can get into our investment thesis, but that's you know, those those just don't go away. Um, people just don't understand that, you know, um, you know, for example, uh, you know, a Tesla motor, uh, everyone thinks, you know, Tesla is this this modern Marvel, but you know, what goes into the car are very, very basic components, and that's you know, and that's where we like to insert ourselves into the whole you know ecosystem.

SPEAKER_01 2:14

Fantastic. And I mean, I suspect that uh Kurt, this is very much invoke with uh with the new president. This is definitely a mandate, it's like bring home manufacturing now, is just said then done, and maybe not all manufacturing is suitable to be repatriated back to uh to America, but certainly some, particularly if it's more of a micromanufacturing rather than mass scale. Um, why don't we turn over and just chat a little bit about big seven ventures? Because what I love about what you guys are doing is it's it's in some ways it's almost like back to basics, but it's not basics, it's focused on industrial things, things that that all businesses need.

SPEAKER_04 2:55

Yeah, go ahead. You want me to go ahead? Yeah, fire away. Yeah, so we at Big Seven are looking for niche industrial manufacturing uh companies that are essential to infrastructure and the building of America, sort of the the simplistic view or the more if you want to call it dirty jobs, the blue-collar stuff. We love we these businesses that we look or go around looking for. Typically, we like them to have been around for at least 30 plus years. Founders are first most of the time it's first generation, but these people have built these fantastic businesses that have been around, weathered a few economic cycles, and we look to come in, grow these companies, and scale them.

SPEAKER_03 3:56

No, no, Kevin said Kevin summed it up pretty well. Um, you know, we we we just we we love the sector, it's often overlooked. Although I will say, you know, in the private equity space, um, you'd be amazed at how how much dumb money is out out there flooding, you know, flooding the market, uh, all looking for these, all looking for these same deals. Um, I I would say our niche, um, when we uh when we talk to a potential acquisition, um, and there's you know, there's always competitors in the room. Yeah, what they like about us is we take a long-term view, and it's not just um, you know, hey, we're not gonna flip, we're not gonna flip this business in two or three years. We're gonna we're gonna run it, we're gonna grow it, um, we're gonna reinvest in it. And then, you know, 10 or 15 years from now, um, we can decide what we want to do with it. Um, and my guess is in in 10 years, um, you know, we'd probably just keep running it. So we love established businesses um that are cash flowing, that that perhaps haven't taken advantage of some of the technology or the controls out there. Um, you know, so so in that we can we can really boost efficiency and and take some waste out and and boost margins. So that's really we we come in, we don't want to we don't want to blow any operation up, but we just we surgically look at it and and just think, well, you know, how you know if we're to uh if we're to 20% gross margin, well, how can we get to 25% gross margin? And we just sort of we just sort of, since we are operators, we just that that's that's what we we think in terms of margin. Um and so uh the these businesses are amazed at um at the potential they had been sitting on, but didn't really you know unlock it until you have you know some outsiders just ask asking a lot of questions, dumb and smart.

SPEAKER_01 5:44

I understood. Can I just double click a little bit on the investment thesis? I mean, you're talking about the longer-term horizon, you're talking about like um running and operating the businesses. Um investment thesis, uh uh I read about continuity focused investing. So kind of like how does continuity focused investing differs from private traditional private equity?

SPEAKER_03 6:05

Well, you know, again, it's all um it's it's it's what's baked in and what what we decided on and what works and what sort of differentiates us from any other um private equity group. You know, we we we don't we're we're we don't highly leverage any deal. Um so these are very these businesses, they're very uh we'll call them legacy businesses. And they've you know, they've had years of of break-even uh and they've had years of of double digit explosive growth. Um, and so we know that going in. So our our thesis, we're very patient. Um, we never over we never over lever. Um and then in these in these sort of long cyclical legacy type industrial businesses, you know, they tend to cycle in three years. And that, you know, for private equity, that's a you know, that's almost a that's a terrible thing for for for traditional private equity, you know, because they want to dress this thing up in three years and and sell it. Whereas we'll patiently grow this thing. Um, you know, we like to see 10 or 15 top line growth, you know, year in and year out. And after five years, you've almost doubled the business. So that's where we really diverge from. It's our time horizon, it's our um, you know, sort of the capital structure, um, our tolerance for um you know for debt, um, not a lot. Um, so yeah, in fact, this one deal we're working on, and I didn't mean I don't mean to get in the weeds, but you know, it's a hundred percent equity. Um, we just don't want we're putting zero debt on it, and so you know, day one, it's going to it's gonna provide um, as we see it, you know, outsize returns for our for our limited partners. So very good.

SPEAKER_01 7:45

Yeah. Um I mean, you're be already highlighting some of the kind of the principles that you guys uh adhere to. What what are the most common ways in which um big seven ventures upon acquisition drives a lot of value or creation, or how do you create values within this company? You talked about some of the digital transformation, or but what other ways do you add value?

SPEAKER_03 8:12

Well, we've got, you know, uh we we have a playbook um and it works. Um and so we walk in and we, you know, we it every it you know, soup to nuts. We set up an incentive program for senior management. We love, you know, most senior management um, you know, they stay. Um, they know the business, they love the business, and uh, you know, they're just they're they're they just happen to be dancing with somebody else um besides the founder. So, you know, it it just starts with everything. It starts with um, you know, incentive programs and we like to build, we like to build uh a culture. Um, you know, hey, we're not just we're not just some, you know, a marauding group of of four that are you know that are gonna come in and and drain the company of cash. No, no, no. We we we want to help you uh we want to help you buy that house or put your kid through college. So so it's really a unique um cultural fit where we kind of um slide in. And then on the on the quantitative side, it's just you know, we have these dashboards, um, and it's funny, every acquisition that we go into, they they know, they intuitively know what we're looking at, but they've just never had it explained to them or or clearly set on their desk saying, these are the five things that we have to have, you know, you know, month in and month out. So it's so it's you know, it's just it's it's our playbook, it's just a little discipline, and it's actually just uh unlocking these, um unlocking the team that's probably been under um you know the founder owner for you know 25 years, and and the the founder owner, what we've discovered, they usually have a pretty healthy ego, you know, and they and and a lot of times they've built great businesses, but but they they stop listening to the people that are that are doing the work and and we sort of we we sort of flip the the pyramid upside down.

SPEAKER_04 10:02

Yeah, Kevin, is that is that yeah, no, I think that's completely accurate. You know, the the the seller, founder, whatever you want to refer to them as, in our case, they've sort of been on cruise control for the past 10 years or so. And so they've as Kurt mentioned, has the entrepreneurial spirit spirit that they once had has sort of evaporated, which is understandable with age, yeah. Uh uh energy and everything else that they once had to put into the business. And so when we come in, we're re-injecting that energy that originally was there 30 plus years ago or whenever it was founded. And again, Kurt mentioned, you know, we're listening, we're turning the pyramid upside down, listening to people. Where can we improve? And you know, we value everyone's opinion.

SPEAKER_01 10:54

Makes sense. Um, change is hard. Um, how do you navigate through the change, especially because um, and and and Kurt, you you highlighted this that a key component of what you're trying to build, or how do you build the future is is to empower the leadership team that's within the company. So the transition from like the founder being in place, and he he or she has built a company to where it is today, to now a private equity company coming in and providing its influence or playbook in terms of how to run a company. How do you navigate through this change to make sure that the key man or key woman risk is addressed and that we we keep the people that the the highly valuable employees in place?

SPEAKER_03 11:37

Yeah, um, we have a secret weapon, and that's called Kevin Solquist because he's he's the he's he's the nicest, most sincere uh guy that you're gonna want to know. But no, I I joke, but you know, we just have honest, obvious, honest conversations with them, and you know, and uh and clearly, you know, trust is earned. Um, so you know, day one, uh nobody trusts us, but you know, give give us give us, you know, give us a couple quarters and um the I they're they're to I I would say 100% of the time they're they're um incredibly, incredibly surprised. Um and then you know, uh after a year, they're really they're really to break, they're ready to break down walls because uh, you know, it's just it's the little things. Um we we return phone calls, we um, you know, we know everybody's name. Uh, you know, we don't we're we're sellers, not tellers. Um, you know, now not to say if someone absolutely can't get on board, then you know, then usually it's probably the right thing that we, you know, that we part, that we part ways. Um, but it's it's it's really more of a you just sort of in you figure out what culture they have, you insert your way, your yourself into it, respect the culture. It's obviously been created over you know 20, 30 years, you know, and then you just make you make small changes. And you know, you can't, because everyone, you know, Maxim, you said it, uh change freaks everybody out. And and but you know, it it small changes, you know, incremental, you know, quarter turn, quarter turns, quarter turns, and by you know, by the end of year one, you can do you can do full turns and they you know and they're ready to go.

SPEAKER_01 13:14

Yeah. Um, curiosity question because uh both of you talked about kind of like this creating an alignment between you and and the leadership team play so at the organization. How do you go about goal planning or goal setting or kind of like how do you create this alignment so that uh to your point, um the team has the the incentive, the desire, the ability to to smash through walls?

SPEAKER_04 13:40

Well, I certainly think you know you make it one a collaborative effort. And as we've mentioned, we listen to everyone's input and we show that value that their opinions and thoughts matter, and then we take that and combine it with what we think should be done along with them, and we you get buy-in that way.

SPEAKER_03 14:05

Yeah, you know, I I I I and I think people are amazed at how how much they underestimate um, you know, their their abilities or where the business can go. You know, they'll we'll sit and we'll forecast, you know, we'll do a we'll do a forecasting session. Everybody loves those. But you know, hey, how much how what do you think sales are gonna be this year? And and three people will say, um, you know, I pick a number, 20 million. And and Kevin and and Kevin and I will sit there and go, you know, I I think you guys can do 24. And then, you know, then they go through this. Oh my god, there's no way. And then, you know, like month nine, month 10, month 11, they're they're getting really close to 24 million. So so people people um they they're very hesitant to go out uh on a on a limb, but but if you can pull and and and coax it out of them, it it's amazing what what what they can do um and and don't even know it themselves.

SPEAKER_01 15:03

What has been the biggest unlock that uh that you have seen in terms of in terms of um driving revenue or driving growth, driving scale?

SPEAKER_03 15:16

What has been the greatest unlock? Like what like what has made what makes the biggest difference? Yeah.

SPEAKER_04 15:23

Kevin, you want to you know well I mean from where I mean the biggest lock is one, you get the buy-in and you get everyone motivated behind one team, one dream, right? I mean, not to be oversimplistic there, but it's empowering those people, as Kurt mentioned before. Oftentimes they sort of underestimate their net worth if or their worth within the company. And if you foster that, like, hey, you got this, go, you know, give them a little belief in themselves to to go down that road. Um, I think that you know unleash a whole new wave of energy and entrepreneurialism where it it's we're we're you start firing on all four cylinders, so to speak.

SPEAKER_03 16:14

Yeah, yeah, you know, and I would add to that, um, you know, it's just a bunch of questions. You know, why not? Um, you know, hey, hey, are we selling to this, are we selling to this segment? Are we selling to this customer? Oh no, you know, we we had a falling out with them 10 years ago and and we can't sell them anything. Um, you know, Mike, and and and Kevin and I will say, well, why not? You know, has anybody called them? Uh, you know, so it's just these are very basic questions, but they're all sort of why not questions. Um, yeah, you know, have our have we ever tried selling to um you know GE? Oh my God, you know, the approval, the approval process to sell to GE is, you know, and they'll give you 25 different reasons why they can't do it, but you know, you you get back to them in like three weeks and they'll and they'll say, Yeah, we're approved with GE. We have you know, we have a meeting with the uh you know with the sourcing manager. So it's just a it's a series of we can kind of survey the terrain. Um and what happens is we come in and our spotlights are our beams pretty wide, and then if you if you've been at the same job doing the same thing for the last 15 or 20 years, you you're the beam just gets a little smaller. So so we just we we just there's a lot of why not questions.

SPEAKER_01 17:24

Yeah. Make sense. Yeah. How do you how do you guys go about finding uh this essential backbone, irreplaceable businesses? Like what what's your deal flow, deal flow analysis, uh scouting for businesses can that that fit your investment thesis?

SPEAKER_04 17:46

No, I for us it's a combination of a few things. One, I mean, like everyone else, you have your various brokers out there with the MA firms that we've forged relationships with, and they know what big seven likes. Um, and if we haven't heard from them, we'll sort of reach out to them and say, hey, you got anything interesting out there? Secondly, it's word of mouth. Hey, and I I know some guys that you know would love these types of businesses. The other one would be Kurt's great at this, Kurt knew of a couple companies in a certain geographic area. We'll then, if we don't know anyone in that area within that company, we'll go seek out hey, who's the president of the Rotary Club or the Chamber of Commerce? And we'll go out and befriend them, and we'll say, Hey, Joe Schmoe, uh, Kevin and Kurt, we're some really nice guys. Can we take you out to lunch? And then we'll we'll just basically like, hey, you know, there's a couple companies that are probably members of your organization that we would love a warm introduction to, yeah, and just have a friendly conversation, nothing pending, but you know, we do it that way. And and that's really, I mean, look, big seven, we're not gonna sit there and we're not gonna compete with some giant PE firm. That's just not us. We're looking for that undermarketed, not market deal where someone is looking or thinking about selling. And they're we're gonna go meet them in person and say, This is what we are, we are going to 100% embrace the culture and the environment in which you've created over the course of this company's history. Uh, so it's again, it's brokers, word of mouth, and then you know, if we find a company through the various third-party websites where you're kind of scouring for these, you know, niche industries, maybe you know, using AI or what have you, and you don't know whether they're for sale or not, but it kind of narrows the focus makes sense based on your search.

SPEAKER_03 19:53

Yeah, our search is very we we we're able to um our searches are pretty efficient, um, but but the only way they are it's it's it's just personal relationships. You know, we establish a personal relationship with a owner, founder, seller, um, or a business broker, or like Kevin said, I mean, that was kind of a funny example, but we saw a couple businesses and we had to we went through the chamber, and the chamber introduced us to the manager, the manager introduced us to the owner. So it's we we get pretty we're we're pretty we're we're pretty persistent and we get very creative.

SPEAKER_00 20:25

Yeah. And where do you guys invest in and what's the typical acquisition size? Like, is it mostly in California, all over Western United States, all over United States?

SPEAKER_04 20:37

Um uh yeah, I would say we're industry agnostic, we're pretty much geographically agnostic, okay, in all honesty. You know, just because of where we are, the east coast might be a little tough one. It would have to be of a certain size to justify you know travel going back and forth. But I mean, our typical deal size, let's just say on the top line, it's gonna be something between eight and nine million to twenty-five thirty. I mean, that's a very large range, but that's sort of our deal specific, yeah. Deal specific. On the bottom line, it's gonna be call say, you know, keeping the numbers consistent, you maybe 900 to a million to three million. And as I mentioned before, we want these companies, we like them to have been around for at least 30 plus years. They don't necessarily, you know, every company has its little bump in the road, so to speak. Yep. Uh, but for the most part, they've been growing and profitable. And they have a they manufacture a part or a product that is essential to America. Yeah.

SPEAKER_03 21:49

Yeah, yeah. I I I would just I I'd I'd put in um do we'll will we look at um will we look at business that are there states that are friendlier than others? I mean, come on, we uh we all know. So um we're we're looking at a we're we have an acquisition um here in California. I mean I'll be honest with you, I wish it were anywhere else but California. It's a it's a great business. It's you know it's on very solid footing, but you know, Western uh West Coast, West Coast, um, you know, uh Oregon, Washington, California, difficult to do business. I mean, just it's just a difficult business environment. Um, Texas, Texas, Midwest, I mean, you know, those people, those people speak our language. Um so so yeah, and and then the East Coast, like Kevin said, that's um we we we tend to those are just hard to have a intimate uh management relationship with because you can only zoom calls so many, you know, so many times with your team and and you've got to do a lot of a lot of FaceTime. So so I it really center of the country uh is is our sweet spot. Um like I said the industrial heartland, yeah. Yeah, we've we've broke we've broken that and we're we're now um just completing a a deal here in California, which surprised surprised us, but you know it's it's a good business.

SPEAKER_01 23:09

No, I mean that that that makes sense. Um you've talked about some of the investment criteria that you're looking at. What kills a deal like for you? Like what is a what are red flags that you just cannot move past?

SPEAKER_03 23:24

I I'll I'll try, I'll try Kevin. Um we so so what kills deals if we if we find a deal and we get um say we get past the first date, maybe we're on the second or third date, and then all of a sudden um we hear, oh, there's you know five other five other firms um you know looking at this company, we're we're out. Um it just it it it drives the price up. It's great, don't get me wrong, it's great for the seller, but but for us, we we have to make money on the buy. Um and and we we typically uh in terms of multiple, uh, we haven't paid anything more than say a four uh four multiple. So so it's like four own revenue, four and Ibida? Ebita, EBITDA, EBITDA, okay. Which is you know, which is pretty conservative. And we've gotten we've gotten some deals that that you know that are that are incredible. Um, but but like I said, what kills a deal uh when the when all of a sudden the um the the seller, owner, broker, banker, when they throw the door open and say, okay, you know, we're we're we're taking bids, we're gonna take bids or we write your offer, you know, next Wednesday. And that's you know, for us, that's that's we're out. Um yeah. So and then also um we don't mind a fixer upper, but um it, you know, again, if it's a we we sort of evaluate the landscape and think, well, okay, this thing's been run into the ground for the last four years. Can can we turn this thing around? Um, but but again, what what kills a deal for us is um if a customer or excuse me, if a if a company has lost, you know, large company large customers over the last three or four years, so if in their customer base is shrinking, you know, that's just so hard. That's so hard to uh to turn around. Um but I but I would say that primarily it if it's if I had to say one thing, it would be a uh a sort of a bit uh a bidding type war with the with a company. And that that kills that kills a deal right off the bat. But we haven't had, you know, there hasn't, we've never uncovered, you know, when we go through the uh when we go through the financials, we've never uncovered any, you know, any really strange stuff or or fraud or or you know um uh you know accounting inconsistency. We've never really encountered that, you know, clearly that would be a red flag, but but ex but from our experience, we've never, you know, people want to get it right, uh, for the most part.

SPEAKER_02 25:53

Yeah.

SPEAKER_01 25:54

Um, I mean you got you guys see a ton of deals. Um, if you don't mind sharing, what's the most overlooked sector or sectors in the moment that people are maybe driving by and not realizing how much value this thing has?

SPEAKER_03 26:11

Oh, I I maybe you know, Kevin, that could be what we're looking at right now. Yeah, um, you know, it it's your you're gonna laugh, you know, industrial fasteners. Um and you know, in this company, this company's been around for almost 50 years, and uh they're they're in this little nondescript building. You like you said, you you pass by it a hundred times and don't know what they do, but yeah, um we like yeah, we like the uh industrial fasteners um because it touches everything, whether you're building a skyscraper or a car or data center. Or data center, yeah. Um, so I would say that's that's we've had good luck with that one. Um we have. And and again, uh China, China was the killer. Um, and they, you know, they drove uh they drove uh uh hundreds, if not thousands, of businesses uh you know, out of business. Um, but now with the with the tariffs and this and the new onshoring and the new sort of um hey manufacturing's cool again. Um I we see you know we see a really long runway with these with these companies, but you know, Maxim, it's not like you know, they're not it's it's not like AI, it's not AI returns. I mean it these are just solid, yeah, right? I mean you could make it's you know 15 15. Um if you're an investor and you're making 15% with us, that's pretty damn good. But it, you know, it's not crypto, it's not AI, it's just it's it's just what it's gonna be. But that is, you know, those are outsized, oversized returns, in our opinion. Um, but it's it's not sexy.

SPEAKER_04 27:48

And Maxim, we tell our LPs, you know, we're we're your contract investment. Yeah, we're we're you invest with us, you're sleeping at night, yeah. Uh, you're not worried about some technology taking over your business or throwing crashing in the ground. Yeah, you're investing in with us because the products in which we're producing are gonna be here tomorrow and the day after and going forward. And as Kurt said, you know, you're not gonna get the same return uh as you would possibly, but you're sleeping at night knowing that you're gonna get a nice steady return.

SPEAKER_01 28:28

I couldn't agree more with you. Um recently we were asked to to raise a fund for luxury real estate, and it's the same situation. Uh, is it like uh are you gonna get 30, 40, 100 to 100? Hell no. You're gonna get 15, 20 return. That's pretty good. Is it great? Well, low risk, low reward, right? Like lower risk, lower reward. But but to your point, you have something tangible, physical to touch. Um, like so you can sleep well at night. Um, yeah, well said. And a business we started to to work recently with is SEALs. Um, and I'm absolutely I was absolutely downfounded at to as to how much growth they have had over the last few years, in particular with COVID, because everything needs seals. Um what is industrial equipment, yellow piece of equipment, like caterpillars of the world, like everything. And their business is just like like a rocket, like a rocket.

SPEAKER_04 29:28

We identified a gasket and steel company last year.

SPEAKER_03 29:31

Yeah, that was the one that got that was the one that got away. Got away, got away.

SPEAKER_04 29:34

But we that we it's you're too to your point, Max. I mean, it's it's a great we we love that. Yeah, yep. Absolutely love that. You brought that up in the business.

SPEAKER_03 29:44

Yeah, that still kills us. Uh yeah, when you brought that up, it brought it brought back old wounds.

SPEAKER_01 29:50

Well, they tried to buy a company in in Texas, uh, a manufacturer, and unfortunately, somebody else came in with more, a lot more money, and and it picked up the company, but yeah, it's it's a great business. Yeah, yeah.

SPEAKER_04 30:03

We lost it to a strategic. One of their competitors came in and basically it was almost two X greater than what we had. And we came in at what we thought it was like a seven. We came in at a seven X. Uh, and the competitors like, Hey, we're gonna roll you up, and I think they gave them like an 11 or a 12 multiple, and we're like, Yeah, we can't compete with that, understandably.

SPEAKER_01 30:28

So, yeah, and and as you said, like you make money on the buy, right?

SPEAKER_03 30:32

Yeah, we if if you're you're if you're up at a 10x, man, oh man, you you are walking a tightrope. Yep, yeah.

SPEAKER_01 30:40

Well, it just it stretches the horizon that much longer, and like the longer the horizon, the less certainty you have over the outcome, yeah, correct for sure. Do you guys co-invest with other investors, or everything that you do is 100% big seven?

SPEAKER_04 30:57

We wouldn't be opposed to it. Um, we haven't as of today. Um, but look, I mean, you know, if there's an opportunity and it presents an interesting um story, if you want to call it that, yeah, we would consider it. Same thing on the like, you know, if someone let's say you had a situation where you have three partners and two want out, or maybe one of the one of the three wants out. I mean, we would can look at that and come in as a junior part, you know, as a junior owner, but there certainly need to be wording that we get first right refusal to acquire the balance at the company down the road.

SPEAKER_03 31:41

Yeah, it it um yeah, we we we just like control. Um and but but we'd consider, you know, we consider some uh you know some joint projects. Um yeah, just it just really hasn't hasn't occurred. We have a we have a wonderful stable of um limited partners who who we've done uh well for and and and they just keep, you know, they no, I shouldn't say they just keep they, but they're they're willing to take another um you know another trip with us if we find something interesting. So so we really haven't had to um you know uh go out and and you know and sort of engineer a um you know some sort of more more complicated partnership. Our our our recipe is very simple and it and it's you know and it's it's paid off.

SPEAKER_02 32:23

Yeah.

SPEAKER_01 32:23

Are you guys like how many uh LPs do you have? Are you are you running an evergreen fund? When is the next fund if you're not uh kind of like uh when are you raising, how much are you raising for the next round?

SPEAKER_03 32:35

Um our typical raises um are you know say say you know five five to twelve million. Um and I would say uh on the limited partner, um if you made me put a number, I don't know, 20 um that are willing to come with us. Uh but but we are it's deal by deal, so it's not it's uh and unfunded, um, which we like. Um for first off, the the reporting and um the regulatory is um it is totally manageable. Um but once you know once you start getting into a fund raising money for a fund, um reporting requirements become a bit onerous. Um so we like it that way. And then you know it's deal by deal. And if you're if you're in a fund, if uh a couple pieces of the fund are under underperforming dramatically, you know, it drags the whole thing down. And so we like, again, we like you know, it's deal by deal. Um uh R LPs understand it, they can touch it. Um actually, in fact, a lot of our LPs usually want to take a tour. Um, you know, they want to see the facility that we're you know that we're going after. So yeah. So it's it's so it's very tactile. Um, but but again, you you limit the risk deal by deal. Um, you know, not you know, so so far we have have done well, you know, deal by deal, and you don't have this this sort of blending of returns. Um, we're looking for, you know, we're looking for uh outsized returns deal by deal. And if and if you know, if by chance you strike out on a deal and and it goes south, it doesn't drag the entire, you know, the that you know that that's the that's the logic, but that's what the LPs love the transparency of individual opportunities. Yeah. And you know, and a lot of times these private equity groups they they hide, you know, management fees, and you know, it it it's it's uh it's a pretty um it's it's pretty gray what what goes on in these funds. It's um you know it's a black box for a lot of investors.

SPEAKER_01 34:41

Yeah. Well, opaqueness versus transparency, it's it's it's always better. It even if the fund is perhaps not achieving uh what LPs are expecting or if the investments by having transparency, everything is on the table. Uh everything could be discussed. Yeah, I agree.

SPEAKER_04 35:00

And we tell our LPs, look, we're gonna update you quarterly with financials and how things are going. And we were having this conversation, Kurt and I, with uh LP yesterday, and we're like, he was saying, Well, uh, do you give monthly? And we're like, Absolutely not. It's kind of hard to get a good picture on a monthly uh update, but quarterly, absolutely. Uh, but it hey, you know what? If all of a sudden, you know, you wake up at night and you have some premonition, oh my god, pick up the phone, call us. We're happy to jump on. We're here for you. We're we'll love to talk. It's an open book, we're not gonna hide anything, and we'll we'll share what we have.

SPEAKER_03 35:41

Makes sense. You know, a lot of times ELPs, uh, you know, with with sort of a direct uh relationship with them. I mean, they'll call they they'll call us and say, hey, have you guys thought about, you know, maybe this is a bolt-on to the you know to the business that I'm invested in. So it's yeah, you know, it's it's uh it's funny some of the um the the feedback is it's great, it's valuable, you know. Uh more is better than less. So we haven't actually been able to make an acquisition on a limited partner um tip, but you know, you never know. Keep them coming. Yeah, exactly.

SPEAKER_01 36:16

So you you guys talked a lot about control. Um what's your ammo? What's your ammunition in terms of driving operational excellence within the businesses that that you that you acquire?

SPEAKER_03 36:29

You know, again, I think it it just comes uh, you know, the the playbook. Um if you you know, really um what you're trying to do is doesn't matter what business is, doesn't matter what you're making, if you can create, I don't know, whatever the headcount is, you know, 20, 30, 40, 50 owners um that have a direct stake in um increasing efficiency, rooting out waste, um a lot of peer, you know, sort of um peer pressure to to do to do the right thing when nobody's looking. That that's what drives it. Um and so if you create owners, you you've got you're you're never gonna get 100% buy-in. Um if you get 90% buy-in, I think you're you're doing pretty well. But you know, that that's the sort of self-sustaining um, you know, culture that we like to create. And and how you know, how do you drive it? They drive it. You you just give them, you know, you just give them what what's in it for them, right? And uh, and if you create uh if you come up with some creative ways to uh share the profit, they're in. Um it's you know, at the end of the day, they're you know, they're they're not there because they love the work that they're doing. They're there, they're there to earn money, take care of their family. Of course, and so so we're absolutely realistic about that. And and you know, they they spend more time at the plant than they do, you know, at home with their family. But if we can create uh, you know, uh dynamic um uh culture environment that that they're not just another cog in the wheel, I mean, come on. That that that that makes life a lot much, it makes it better. And then and then you, you know, like I said, you create you create a bunch of owners on the shop floor. And so you're not, you know, no one's down there cracking the whip because they know they know what to do, and they know if if they you know if they're underperforming on Tuesday because they had a long night Monday. Well, you know, that impacts everybody, that impacts everybody down the line. And and potentially you, you know, you make less money that day.

SPEAKER_01 38:30

Yeah, I agree. Um, I mean, greatness is in the agency of artists and I I had a mentor for a couple of years uh when I was working at a big energy companies, and he said, success for you as a leader is defined by um how many high fives the teams give each other when you're not there, right? Like, kind of like what happens when you're not there. I was like, this has stuck with me because it's it's so visual, right?

SPEAKER_03 38:54

Like, yeah, um, yeah, you're right. That's yeah, hopefully not a lot. Hopefully, not a lot of high fives. Yeah, yeah. Um that's awesome.

SPEAKER_01 39:07

Um, what uh what should people know about you if they want to get in touch with you, if they if they want to pitch your investment, if if they think that they have a company, is your portfolio um um publicly available so that people can see, okay. Well, I can see there's adjacency here where we can do some kind of value chain integration.

SPEAKER_04 39:27

Yeah, you can visit our website, uh, hit either of us on LinkedIn if that's uh if you so choose. I mean, we're uh readily available uh and more than willing to talk to those that want to hunt us down.

SPEAKER_03 39:43

So yeah, yeah. And I don't we have we have uh we we have our tombstones, don't we? You know, yes on the website. Okay, so it shows it shows the companies that that um you know that we're involved in, yeah. Yeah, and so you know, very very clearly um you'll look at it and go, oh okay, I get what these guys are up to. So yeah.

SPEAKER_04 40:02

Yeah.

SPEAKER_01 40:03

Uh do you want to give a shout out to one? Uh like we wait. Can you pick your favorite child?

SPEAKER_03 40:10

I think we have a new favorite child, don't you, Kevin?

SPEAKER_04 40:13

Yeah, I I I think so. I think we do.

SPEAKER_03 40:17

Yeah. Shout out, shout out to uh Conklin and Conklin threaded rod. Um American quality made uh in Union City, California, of all places. Okay. Yeah, wonderful business, wonderful team. Uh we're we're we expect we expect great, great things from them. That's amazing. Yeah, that's amazing.

SPEAKER_01 40:41

Anything that they haven't asked you that they should have asked.

SPEAKER_04 40:47

Good question. Not that I can think of.

SPEAKER_03 40:52

Yeah, I um yeah, no, no, Maxim. Uh, you know, great, great talk. Um, you're looking at uh um Kurt and Kevin are um, you know, we're we're uh we're chief bottle washer, um, you know, server and chef uh all in one. So uh we run a small lean operation and um you know we're we're very proud of it. What else go ahead?

SPEAKER_01 41:18

I I was just gonna ask Kurt uh and Kevin, what is your technology stock looks like for in terms of evaluating deals, um assess like evaluate like uh ingesting deals or kind of like deal flow, evaluating deals, um doing the due diligence, monitoring kind of like performance. Like, do you have um a system that you use? Like what does it look like?

SPEAKER_03 41:43

It's just it it's dashboarding. Um you know, you're you're you're gonna laugh, Maxim, but um all of our companies um are are driven off of QuickBooks. Um we just we see no we see no value in a big Microsoft dynamics or whatever they call it now or um sales boards or yeah yeah is it still called dynamics? I don't know. Yeah, um yeah, I I had an integral in my former corporate life. We had an integration that lasted three years. So I think the only people that that made money off of that deal were exactly got it. But anyways, we I mean it's just so basic. Uh it's it's powerful, and we're able to um we're we're able to collect uh all the information from our different groups and then and then dashboard and then just dashboard them all. So, you know, we're we're watching you know, there's just certain metrics we know if it's you know uh red, yellow, or green. Um, and we prefer green. Um so so really it's just it's QuickBooks, it's a lot of uh Kevin and Kurt interface. I mean, not not extensive amounts. We are a AI, you know, my plug for AI is oh my god, it's so powerful. Um but we're just we're we're just figuring out how to uh how to make use of it um and and carve some more time out for uh for ourselves, but but we're gonna do it. Um so yeah, it's just a basic accounting system, dashboarding, and then it's good old fashioned talking to our people. Got it, got it. Any parts of the case?

SPEAKER_04 43:09

I would also add we have a great or really good stable of advisors that we've asked to help, big seven. And when and we'll use we'll use them to ignose them where you know we'll have them do everything from hey, come in, take a tour, tell us what you think. If they have industry knowledge to tell us, you know, good, bad, and different. We'll have them, yeah. Maybe we'll bring them in. Um, and they might help. Hey, I'm got some people that might need this, that product. Yeah, do you want do you mind if I help you with sales? You know, we're completely hey, go go knock yourself out, but I think it really helps from uh from our standpoint, or at least from my standpoint. Where you bring in someone who's been in the in let's say the steel industry as a whole, and they can walk a factory floor and immediately got it. I know what this does, I know what that does, and they get it. And they can tell you, okay, you might think about this or that in the future.

SPEAKER_03 44:21

Makes sense. A lot, a lot of a lot of help, a lot of outside help. Um, which is which is one and that, you know, those are all for those contacts are all forged through um, you know, relationships over the last 30 years. So you call people up, hey, I need a favor. Um, you know, can you advise us on this deal? And and you know, 10 out of 10 times, you know, they'll say, where do you need me? How long do you need me? Uh, you know, I'm happy to do it for you. Right. Absolutely. Any parting words? Uh no.

SPEAKER_04 44:53

Thank you for having us. This has been wonderful.

SPEAKER_03 44:55

Yeah, yeah. Thanks, Max. Um, uh, yeah, super uh great, great conversation. And uh, you know, I hope uh you know there's a resurgence. There there is, uh, you know, onshoring and buy America. Damn it. Let's that's what everybody needs to do.

SPEAKER_01 45:09

I agree, I agree. Uh, I mean, I think that everything is moving from the macro to the micro, uh, what it's the personalization, what is micromanufacturing. It things have evolved significantly from 30, 40, 50 years ago.

SPEAKER_04 45:26

Are you noticing a similar um movement in Canada in manufacturing?

SPEAKER_01 45:33

Um for sure. I mean, like the the benefit that we have is that uh our currency trades at a 35% discount to the American dollar. And obviously, yeah the United States is our biggest trading partner. So um by by purely based on uh currency arbitrage, we we we we have more manufacturing. Um, we're seeing some of it it where it makes sense. I mean, uh at one point I was a consultant with Nike, right? Like all of the hard goods were manufactured in America, all of the soft goods were manufactured overseas, or at least kind of that's kind of used to be the case. So we're seeing some of this kind of like the hardest stuff gets done locally, um, or that requires a higher degree of precision, or or maybe the the transportation component, supply chain component, either for supply chain disruption, or or cost uh is is more local to the market, and then anything that could be a mass produced is is offshore somewhere else. So we're seeing continued um um drive for this. Um, what we're seeing the Canadian government is as well as the provincial governments trying to do is like, how can we become um additive in terms of our value chain? So if we're producing something, can we add another layer in terms of adding value to the product before selling it off wherever to a to whatever export market? So we're seeing a lot more push for that with at both the provincial level as well as at the at the at the national level. Hey Max, last question are you a hockey fan?

SPEAKER_03 47:08

Uh a little bit, not very much. Okay, yeah. Okay. I I'm I'm a secret Edmonton uh Euler fan. So oh, you are just not asked, yeah.

SPEAKER_01 47:18

Um well I can tell you that there's a massive rivalry it when we and we call it the Battle of Alberta, where uh every year there's it's Edmonton Oilers versus Calgary Flames that they play. And even though we're 300 kilometers apart, it's not very far. Like, what is it, 150 miles, 200 miles? Um there's uh Edmonton and Calgary absolutely hit each other when it comes to hockey because those are iconic teams. Um Edmonton is definitely doing a lot better than Calgary at the moment. Um, yes, yeah, yeah.

SPEAKER_04 47:52

But Edmonton had their down cycle as well, though.

SPEAKER_01 47:55

Oh, for sure. Like it's like any team, yeah. Yeah, yeah, for sure. We still haven't yet seen the resurgence in hockey in Calgary. We're building a new arena at the moment in Calgary, so maybe that gives a little bit more energy because our arena is is iconic. It's called a saddle dome, it looks like a like a horse saddle, uh, but it's it's becoming dated and old, and it doesn't hold uh very many people. So we're going to a big arena, not very much bigger, it's it's only 30,000 people, but it's uh uh it it it allows for more participation. So we'll see kind of like if that provides a little bit of a boost in terms of how the team is doing. Okay, very nice. Yeah, yeah, absolutely. Um, well, guys, it was an absolute pleasure having you on. Um, super excited. We'll produce the podcast within a couple of days and post it.

SPEAKER_04 48:50

Okay, well, thank you, Maxim.

SPEAKER_01 48:52

Thanks, Maxim. Enjoyed it. All right, bye.