15min chapter

The Joel Klatt Show: A College Football Podcast cover image

Alabama makes statement, Colorado controls destiny to make Big 12 champ game & Georgia in trouble?

The Joel Klatt Show: A College Football Podcast

CHAPTER

Georgia's Tough Road Ahead

This chapter explores the challenges facing Georgia's football team as they gear up for a critical matchup against Tennessee, despite the latter's injuries. It delves into the current SEC standings, playoff implications, and the competitive chaos that could leave 10-2 teams on the outside looking in. Additionally, the team highlights impressive performances from Alabama and Colorado, further complicating the race for postseason success.

00:00
Speaker 3
A, so all these companies that are largely recession resistant, have been around for a really long time that we can buy at a very reasonable multiple, multiple of cash flow. That isa, which is sometimes different than sass, which we can talk about, but that's really our sweet spot. And it's follow that play book and do that over and over again over a long period of time. Savour ive. Anything to add there?
Speaker 2
Yes, the only thing i would add colour on that is we we really like to see some growth angled to the business. So we'd probably rather buy the number three plumber in a metro ratherthan the number one. Ah, especially if we think that the number one is vulnerable in some way. A, and so when you're buying businesses, you you protect your downside by buying it a little multiple, but you really deliver returns for your investors by by getting te business on the growth track, especially if it wasn't before. And that usually usually comes with bringing in new energetic management with good ideas. And
Speaker 1
then how are you actually buying them? So, like, you know, to of the principles that jump out to me here, ah, as far as the advantages of your model, it's like the actual financing structure of how you're financing the deals. Ah, you know, to generate returns. And then, ah, the whole c s b s thing, which i want to just like understand a little bit better. So how are you financing the deals? Like, are you doing s b a loans? Your doing cellar financing? You know, kind of, what's the actual structure of how you're doing these deals that people can take away, you know, maybe execute in the future for themselves? Yes,
Speaker 2
there's we we've done everything in the kitchen sink. So everything from all equity to cellar finance to s b a a to, ah, you know, sort of, we've gone close on some mezanine financing. We haven't actually done one with a mezanine lender. Ah, but there are folks out there who will lend, say, five to ten million dollars a ye, only lend to search funds, for example, which are sort of classic. Am you know, a users of that capital? I would say, if you think about the universe of businesses you can buy, if it's under, say, 500 thousand in profits, you ought to figure out a way ta buy it personally, as a listener, with an s b a loan. That's like a real seet spot a, because you can probably by that business for one to two million dollars, and it'll setch for life, if you just run it properly and grow it a bit.
Speaker 4
Am, and
Speaker 1
how you get work? Solick, if some one wanted to do that, if i found a half a million dollar a year profit, you know, land, local landscaping business that i wanted to acquire, ah, how would i actually go about getting an s b a loan for that? And what would e no typicl kind of terms, like what wawd would be signing up for with that s b a loann, like, how much cash would have to come out of pocket? Just like, gimeme a quickoukno napkin math on it. So
Speaker 2
napkin moth is, let's say you pay three times cash flow, which is very achievable. Some sectors you'll have to pay more. Some sectors you can even pay less. But let's just call it three times a so pan one point five million for it. A, you are takin as b a loan for 80 to 90 % of that purchase price. So your coming out of pocket may be a hundred and 50 to 300 thousand dollars. If you don't have that hundred, 50 to 300 thousand dollars. A, you can get an investor to come in and provide most of the capital. If your if you sort of have no money at all and no assets at all, sometimes the bank will be cautious just because you're, you're a very weak a garantor there's no sign you can put in any more money if things go sideways. But those deals can still get done. A, and then the sb a loan is a ten year loan, so your payments on that would be awfully reasonable. Lets say 15 thousand dollars a month, just tut spitballing. And so maybe a third of that cash floe goes to service the debt, a, even without growing the business. Another third goes to pay your living expenses. And then you have a third you can sort o reinvest in the business. Now, if you can grow that from 500 k to a million in cash flow, that million in cash flots valu worth four or five times. And so you've created two or three million dollars of equity value right there, in addition to having obviously really strong monthly cash flow for your personal use. Yes,
Speaker 1
this is like the entire model f like, the opped out from the traditional track that i find so interesting. And like grek, gregg and i have differences of opinion, unlike the headaches of potentially running one of these as an individual, a, which i think are very real and people need to consider, cause you actually need to go run this business if you're going to do that form, like a one person, you know, s b a go by a landscaping business. But it's a pretty neat idea. Like, i had a friend who was working at doloit, and, i don't know, he's probly making a hundred 50 a year as like, a director at doloit and doing quite well. But it was like really stressfull. Wasn't goting to spend time with his family. And he literally went and did this, he bought, u bought a local landscaping business and got an s b a loan. And now he's probably making like, a million a year. He has employees.

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