Why nobody wants to buy these businesses

Nicholas, thank you very much. I appreciate it.

Man, that's a very interesting story. I I started out knowing that I wanted to end up here. So I'll start with that. That's kind of what I knew was the end goal. but my my path there was very unconventional. I worked at a startup, that was great. You know, from there I worked at an accounting firm, also great. I thought I was gonna do that for five years, you know, then. Jump into Perry Crossing. But out of the blues, one of my very close friends called me and said he wants to start a startup and he can't think of anybody else to run the finances but myself. And I was like, you know, that sounds like fun, actually, you know, compared to what I was doing right now. So I quit my job, you know, followed him, and we kind of went around the world, you know, UK, Nigeria, London, everything. and back to New York. And that was great. So I enjoyed being responsible. For the financial affairs of a business, you know, let alone a startup. Because it's the lifeblood of the business. You're connecting the actual operations with how the money works to give them the fuel to keep going. So I enjoyed that. And in the in the course of doing that for like a year or two, I got to meet other founders, other startups, other businesses. I really got thrown into the entrepreneurial world. And I saw clearly that finance and understanding of finance is a make or break. for many of them. so after like a year or two with the startup, you know, my friend and I, we kind of parted ways. We're still good, still good close friends, but he wanted to move to a different location. I was like, you know, I kind of like it here. so from there, I was like, what next can I do? And and I said, hmm, maybe I could start doing advisory right now. Nothing is stopping me technically. I just technically finished doing that for someone. So I kept moving on to more short term engagements. So helping Startups with very specific tasks. It could be fundraise, it could be financial modeling, it could be transaction advisory. So that worked out for like five years, mostly in the startup world. Then I moved back to Dallas and I got thrown into the small business, you know, ecosystem and discovered ETA, all of that. And it was something else. You know, it was like, we're talking about real cash flows, we're talking about people who are trying to de-risk. their entrepreneurial success by buying an existing business, that was appealing to me because during those five years where I was advising startups, I also started businesses of my of my own. And I could see some of the gaps, right? So I would say, in a nutshell, Perry Crossing was my or is my attempt to help entrepreneurs succeed. You know, I both startup entrepreneurs, ETA entrepreneurs, acquisition entrepreneurs. I just want to see them succeed. I got very close to them. You know, you you work with them so closely. You're seeing people who are betting against the grain, taking unconventional risk, betting on themselves. And gosh, you just want them to succeed. You just want them to to make it work. So that's kind of what pericursing is about.

That's tough. Easy. The first gap was technical, obviously. So people were making rookie mistakes, like not not putting like proper management of their books, recording. There's already a data collection problem. Then there's a data reporting problem, you know, how you're reporting your financial data, so to speak. Then the last leg of that is data interpretation, you know. We saw all this happening. So what? That's the next question. And when people are unable to make sense of their financial data, they're able to tell that we're running out of cash, even though we're still making sales. You know, when people are unable to tell that this financing terms are not in your favor, you know, or or this money is good, but it doesn't align with what you envision for the company long term. Some founders envision control, they envision you know. fast paced growth, but then you go seek private equity funding. And you know, that doesn't match with that. So there were a lot of those those are things I think were the gaps in the data collection, data interpretation, and what's it called? And making use of the data to benefit yourself. Where I think I'm different, or what I quickly realized was beyond the technical, like understanding what's going on, interpreting the data, you have to know how to deliver the information. And that's where having the entrepreneurial blood in you personally, like like I do, sets you apart. You're able to sit down with an entrepreneur and understand what where the stakes are. You know, so for example, most of my clients they they buy small businesses and what does that entail? It means taking a large loan, probably larger than you know, larger than your house for for sometimes, and you're putting yourself on as a personal guarantee. So after what I do, which is I do financial due diligence, I give them a quality of earnings report, I'm almost saying, hey, here are the green flags, red flags of what you're about to buy. And based on what I you know provide for them, amongst with other things, maybe the legal due diligence, they go with confidence and say, Okay, I want to go ahead and buy this business, or I want to walk away. If they choose to buy the business and they're taking a huge loan for that, they're about to sign on a piece of paper, you know, personal guarantee, they're about to put their house, you know, on the line. That step And that the weight of that step, only people who've been there before, like I have, can understand that. And that informs how you deliver your message to your clients, informs how you engage with them. You know, during during your course of engagement with your clients, if you see that this person is really not a risk taker, you know, you're seeing that beyond what what the business is showing you, you can advise them differently, like, hey, this is a clean business, but still a big risk. And I can see from our interactions over the past couple of months. you actually don't like risk. Should we structure something else to safeguard this business to ring fence, some contracts? And I think those nuances help a lot. The personal understanding of who you're talking to.

Yes. funny enough, the the startup I I quit my job to work for was actually a tech a fashion tech startup. So I've been around the block. You know, I've worked with fashion tech, I've started a restaurant, I've advised restaurants, I've advised you know music artists. I've I've you know I've gone across the board as far as industries, construction, real estate, but my heart kept going back to Oil and gas, energy, power generation, and partly because growing up, most of these very smart people I knew worked in that sector. You know, then even bringing it home a little bit, my my parents like also like worked in that sector or have businesses in that sector. So I I saw that, you know, growing up and I couldn't escape it. You know, that's probably also why I came to Texas. It was like, I just wanted it to be a I wanted that option to be able to like dip back into the industry.

And when I saw that even during my free time, I'm reading about the industry. You know, they they say you're not really passionate about something when it doesn't pay you, but you keep like spending your time on it. So when I saw myself reading about the industry, going for conferences, I'm like, you know what? This is actually my passion and how can I combine it with my passion for advisory? And then I came up with the idea of actually niching down and just focusing on financial due diligence for energy services, oil and gas, power generation, manufacturing. companies. That way I'm combining my passion with my other passion and it becomes fun all throughout. And then at a high level too, when you see people acquiring small businesses, there's a lot of gravitation towards home services, you know, and no fault of their own, HVAC, plumbing, all that is great. So you're seeing a new generation that's, you know, maybe my age mates and people in the 30s, 40s, 50s, acquiring these businesses. There's a thing in the US called the silver silver tsunami, where many of the boomer generations, people in their 70s and 80s, are you know retiring and moving on. And you know, who's acquiring all those businesses from them? we're stepping up. But in our generation, I'm seeing that many people are avoiding the oil and gas, the power generation, the manufacturing industries. And I think it's one bad marketing on on the industry parts, but I also think it's that there's there's a fear. You know, there's there's maybe a baseless fear and clarity shines light in the darkness and unpacks such fears. And I'm trying to just be that light.

That that's a very good point. If I'm trying to get a surgery, let's say on my left knee, I'm I'm even gonna look for the surgeon who's like who's done left knees all his life. That's that's you know the the more specialized the better sometimes. Yeah.

Yeah. Yeah, sure. So that's a very good question. if you want to buy an energy services company, you have to understand that these companies are different from companies in other sectors. So think tech, home services. just by nature, they are different. They're structurally different. I'll give you an example. Think of control. If I if if I have if I I'm paying for maybe LinkedIn Premium or AWS subscriptions. I'm paying for all the services. The day I don't pay or I don't feel like paying, or LinkedIn doesn't feel like serving me, it's a it's a touch of a button and I lose access to that service. Right. If you run let's say an a a PPA or a you know a power generation company or any a truck haulage company in the energy services sector, more than likely your assets Right is Within reach from you in your customer. Sometimes your asset is actually on your customer site. Right. So they have some soft control. Even with IoTs and everything right now, there's still a lot of control where your client technically has an unhealthy amount of control over your assets, you know, compared to any other industry. So where, unlike LinkedIn, if you say, okay, hey, I'm tired of serving you, I don't want to serve you anymore. I don't want you as a client. maybe the terms are bad for me. It's very, it's very difficult untangling yourself from that relationship versus a LinkedIn and an AWS. So you're very sticky. Then in a second layer to that is your assets. Like the LinkedIn example, the software companies, services companies, the restaurants, they are by nature, I wouldn't even say that asset light. Some of them obviously have significant assets. But when you think about the value of these companies, assets is just one component of it. There's a lot of value embedded into the quality of the business they deliver, the number of customers. So think soft, soft factors. But with energy services businesses, it's very asset intensive. And the value of your of your business is heavily tied to those assets. Those assets literally there's a one to one line between how those assets bring you your revenue. And what's scary about that is assets are depreciating in nature. know mechanical assets and everything so literally the make and break of your company your company's worth is a depreciating assets so every three four years you need to step up your company by you know buying more assets renewing assets heck every year you are trying to maintain your company not even grow it by spending on maintenance capex you know so that's it's a different kind of industry you are you are Paying significantly to stay at the same line, you know, then there's obviously the contracts nature of our business, similar to the control. Contracts make everything we do very sticky. People think it makes it safe, also makes it very sticky. And then you can say, okay, then after all of this, you still like the industry? And and I and I will say yes. You know, because we these are interesting problems, but they're not they're not roadblocks. That's interesting. Natures of the business that I think anybody who's coming in to acquire a business in this in this industry should be aware of, and that awareness helps you to mitigate around them so that your problems don't turn to roadblocks. You get then secondly, the impact of what we do, of what energy services companies do, is tremendous. Right? We're talking over you know, over the internet right now, that's made all possible by you know the energy services industry. So again. Back to first level principle. Most of my clients, they're coming in to acquire a business because maybe they they're searching for fulfillment. They they want to quit their job, they want to do something fulfilling. And I think energy services is one of the definitely other things, but one of the most fulfilling businesses industries in the world, because you are really directly impacting lives. You're making sure that we as a as a people have access to everything that we currently do right now. And yeah, also directly working with, you know, extremely hard workers. You see them every day. There's less of a remote culture. You're seeing you're seeing the people that that you give jobs to every day. So it's a very fulfilling industry.

I like I like that you say 12, 24 months, because you know, five years from now I have no idea. in the next 24 months, it's still the same thing. I like obsessing over my clients, I like understanding that pain points even beyond the financial due diligence. And hopefully from there I get more ideas. But it's it's just did I provide the best clarity for this guy or this girl when they were about to buy this business? Or did I provide it in the best way? That I provided in the most efficient way. So that obsession with efficiency, with effectiveness, are top of my mind. And I kind of want to really accelerate that more before I think about something else. You know, some thoughts come to mind. So down the line in the future, how can I you know help capital flow more efficiently into the energy sector? Because, like I said about the example of many people want to buy a business. But they don't want to buy a business in the energy energy services world. What that ends up meaning is that many of the current owners of energy services businesses that want to retire or they want to leave their business, they don't have that many suitors looking to buy their business. And demand and supply, right? That may compress the value of energy services companies. And I don't think that's good. I don't think that's good for our country, for our environment. Those thoughts keep me up at night. Like how can we accelerate capital flows into the sector? And I think right now where I stand, just providing financial due diligence, talking more about energy, I think that would help reduce fears for some people who who who consider it, then maybe we can step up in the future and figure out other ways we can attract capital. Yeah.

Yeah, first of all, I'll say I use AI a lot personally and in my day to day I I compare it to maybe I don't know nineteen eighties and nineteen nineties. If somebody says, I don't use Excel, I like you know, XYZ, you know, things that were before Excel and even physical spreadsheets. I think that's not the that that's not a forward looking approach. I like embracing technology. That what is more scary is being left behind. You know, so I definitely use AI. It's a tool. Use it to enhance your work. But what I would encourage people and even clients to understand is that if I need a diagnosis, I think my doctor plus Chat GPT or my doctor plus cloud or whatever are way more effective than me plus ChatGPT and me plus cloud. You know, the level of if you have a race, maybe three three pump three prompts to the most useful outputs, I think my doctors will get there faster than I would. Right. And one of my

Best compliments ever that I received for my work was when a client was reviewing it. We're on the call and he was, he said, You know, Edoza, I I used cloud, you know, to create my own QE while I was waiting for it to be done. And I must say, yours is way better. You know, and I smiled and I said, Thank you, thank you. I use cloud as well, you know, but it shows that. Can you can both use the same tool, but the foundational experience and your approach is going to show it its is going to show and going to tell the difference. That's what same thing with an artist. I mean, before we were drawing on you know pen and paper, now we can draw on a sketch on an iPad, an artist is still gonna better than me. You know, an artist is still gonna be better than me with with Adobe and things like that for Photoshop. That's kind of how I see it. Now, beyond this justification, I think. The approach should be very like you said, procedural. You're thinking about how can I improve the end-to-end process of providing clarity for this user. And one thing that I that technology in general has helped with the process is things around data security, data efficiency. When when I started new engagements, you know, I get access to the data room. And sometimes before in the past, this was like emails flying back and forth. We don't do that anymore. You know, we have a whole product, we have a whole process and we have a better system of engagement that improves efficiency, improves calculation accuracy and things like that.

follow me, talk to me anytime. my LinkedIn is probably my best best approach, Edoza or Basaki on LinkedIn. my company page, Perry Crossing Advisory, is there as well. And yeah, my website too is easy to catch me at, you know, www.perry hyphencrossing dot com. That's a go to place as well. I'm always happy to chat with anyone, everyone in the ecosystem, I think. It's very important we have more of these conversations. And you know, and kudos to you for setting this up as well. Y we when we think about three, five years from now, particularly with AI, I think the the consulting profession is very the value of it is very is very tied to human touch. Right. At the end of the day, the end product, the reports is maybe commoditized, but how was the report delivered? How was it translated? How was it you know, how was it gathered? that human connection is going to be the real thing. You know, and I think that's where we where we shine. We if we have more one on one conversations, have one coffee chats, it helps a lot in our ecosystem.

Thank you very much.