06 Dec Deal Financing- Scenarios, Options and Implications for Both Sides
Listen to Shoot the Moon on Apple Podcasts or Spotify.
M&A Deal Financing. Where’s what we discuss:
- SBA Loans
- Debt Financing – good and bad
- Seller Notes
- Cash
- Equity
- Earn Outs
- What’s the right size deal?
- Buyer and Seller Transparency
Transcript:
Matt Lockhart 00:04
Hello and welcome to this week’s Shoot the Moon podcast broadcasting live and direct from Revenue Rocket world headquarters in Bloomington, Minnesota. As you know, Revenue Rocket is the world’s premier growth strategy and m&a advisory to IT services firms. We are here today with my partners Ryan Barnett and Matt Lockhart to talk about m&a deal financing. Welcome, guys. Good to be with you, Mike. As you say, we’re in our world headquarters, our snowy world headquarters. So it good to be with you good to be inside stay and warm and excited for the new season.
Ryan Barnett 00:47
Totally agree. And great topic today here, Mike. When you think about financing a deal, there’s there’s quite a few options. And there’s pluses minuses along the way. So today, I really want to dig in into a few different options that buyers may have. And then the impact the seller may may have when they’re considering the mode of funding that a buyer goes with. So, Mike, in general to talk about I think we’ll talk about a few things, perhaps seller notes, cash on hand equity, traditional banking options, and in general, so when a company, yeah, when you’re looking to do an acquisition, there’s all sorts of levers you can pull. And perhaps Mike, let’s start with overall, how does how should a firm start thinking about what options that they have in front of them for financing acquisition?
Matt Lockhart 01:44
Yeah, for sure. You know, I think we get a lot of questions from folks about, hey, I’m interested in doing some interest in buying other companies, I know it’s going to be helpful to me and my growth plan, overall growth strategy and the goals that have my business, but to know where to start financing wise, maybe I should go and try to raise some equity, financing, sell some equity, to raise some cash to do a deal. And a lot of folks that think about m&a are early in their development and or they’re new to m&a. Think about that as the optimum strategy. Because they say, Hey, then we’re not carrying debt on the balance sheet. You know, we got another party that’s participating and investor class, it’s participating in our growth. And it’s lower risk than sort of debt. And I would argue that that’s not really the case. I think that if you’re a small tech enabled services company, IT services company, that is pretty hard to one, go raise minority equity, it’s challenging to do that. There are firms that do do that, but I’ll just tell you a challenging, the more important angle on that is that it’s exceptionally expensive, it’s actually the most expensive financing that you can get. And the reason that is is because as you can imagine, if you were to go at your current valuation, and go sell, let’s say, 30% of your equity, and use that as a as an investment vehicle to go grow through acquisition, the value, the overall value of the entire equity equation is gonna go up once you do that acquisition, and continue to go up as you grow the business over time. And that the cost of capital there, I’ll be at lower risk, because you’re not carrying debt on your balance sheet, certainly will be very costly when it comes time for you to ultimately exit. The other thing that’s important to note is that generally, most of these investors are going to look for a relatively quick turn on their on their money, meaning, you know, five years to seven years, and by signing up for equity financing, you’re going to be looking at your investors saying, Hey, we kind of need our money out in five to seven years. So you either need to do a recap, or a sale in order to get those investors out. So it’s not as low risk or no strings attached, as you might imagine it to be on the surface. So that probably brings us to other financing approaches that mean that make more sense. And so some of those certainly include, you know, as Ryan mentioned, cash on hand, you may have some cash on your balance sheet Any way you look at it. If you’re going to do an m&a deal, whether you’re going to finance it or not, you’re going to need some cash. Typically, if you’re going to use traditional bank financing or SBA financing, you’ll need a minimum of 20% of the purchase price available in cash on hand. And so I would just you know, recommend anyone looking to do a deal that they fortify their balance sheet have enough cash around to be able to fund at least 20% What a loan might be. Now, loans either through the SBA seven a loan program, or other SBA programs, or traditional bank financing are actually pretty good ways to go. For most tech services companies, there’s pros and cons to different types of debt financing, which we can get into here in a bit. But for the most part, you can get a fairly long amortization schedule, you can pay predominantly all cash or mostly cash for a deal, which means you get some negotiating leverage with the seller, when you de risking the deal, pay a little less money for the deal if you do that. And, you know, it’s pretty easy to model whether you can cashflow this business once you acquire it or not based on the amortization schedule. So we’re pretty pro debt financing, particularly ones with reasonable kind of market based interest rates. Certainly, there’s a lot of debt financing, that’s not market based interest rates, that’s more risk based. And we don’t think those types of financing arrangements, you know, in the current environment that are getting the interest rates, you know, north of 10%, whatever makes sense for any buyer. But you know, if you’re bankable, and you’ve got a good relationship with your bank, certainly most of them will, will loan you some money to go do deals. So I’ll stop there for a second. Ryan, I don’t know if you want to react to you know, either the equity comments or the debt comments at this point.
Ryan Barnett 06:31
Sure, well, we’ll we’ll start with the equity. So the opportunity of equity seems like it can give sellers a few options. So a seller could sell in, and they could take and use some of that equity for future growth. So I think the opposite to it’s harder, a bit harder to raise money, I think the opportunity for everyone to do better, rising tide, floats all boats helps with that equity option. So if there’s, there’s, if you’re considering the equity route, was a buyer, it certainly is expensive, you’re going to give away more at the end than you are in the beginning. But if you’re in for the long haul together, it’s an option for growth that you may not be able to achieve through other means.
Matt Lockhart 07:18
Yeah, and I guess the comment I would make, there would be that you should know, let’s look at, you know, minority equity versus majority equity investments, you’ll find a lot more equity investors, including a lot of private equity investors, that will do a majority equity investment or recap. And those oftentimes can be a very good way to go scale your business. And certainly, there’s been a lot of private equity money available to, you know, our listeners in the market, provided they have some scale, and I would define scale, as you know, firms that are, you know, pure play tech enabled services firms, kind of north of 10 million bucks in revenue, and probably, you know, starting to approach to 3 million bucks and EBITA. You know, there’s lots of interesting private equity options that exist out there. You know, if you’re a SaaS company, you know, you may be able to do it with a little less profit, but you need to certainly show a growth trajectory that would make make a lot of sense and be attractive to private equity. And, you know, there’s literally hundreds of private equity firms that are in our space and active in our space that want to either do add on investments or build a business from a platform. And if you’re a business that has consistent growing profits that, you know, are into kind of two to $3 million range, and even, maybe even as low as a million and a half and EBITA. And growing, you’re, you’re probably in a position to have that conversation. Minority equity investors do exist, but they’re much more rare. I would think kind of long and hard about that, because certainly the governance structures that a minority investor will put into your business and require that you have in your business, as well as the milestones for growth, me, in some ways, be more arduous than that of a majority investor. And so you know, it’s a good business case for utilizing an advisor to help you if you’re contemplating those kinds of things, and looking at doing m&a transactions in general to make sure that you understand all the benefits but as well all risks associated with an equity investment to fuel your growth through acquisition. Ryan, you brought up the point that I think is worth talking about, which is looking at things in the long haul. And not in not all cases are sellers thinking that way and or buyers thinking that way. But Mike, Ryan, how does time frame play into thinking about what the right financing option is? You know, I would say you need to be thinking about being around and growing that business for at least another five years, if you’re contemplating an equity investment, I think equity is not a good solution for a short term sort of view. And what I mean by that is, you know, almost everyone in our industry is built their firm or is building their firm to someday exit. And, you know, we’ve been doing this a long time and, you know, work with lots of clients. And, and I guess, I haven’t ever talked to one that hasn’t said to me, that there wasn’t probably an exit for them at some point on the horizon. You know, maybe they didn’t know when or how, but you know, it certainly thought, well, you know, the right deal comes along, or I reached a point in my life where I’m feeling like, I want to retire, or maybe I’ve just, you know, want to move out and do something different. I’m going to exit this business. So I think having clarity about that timing, in your own mind, if you’re contemplating it, is pretty important if you’re contemplating equity investments, because, as I mentioned before, you know, equity investors are not, they don’t have an open ended, hey, we’re going to invest in this business. I don’t want to say in all cases, but generally, they want to be able to see a return at some point. And that means that there’s going to have to be a transaction or recap, somewhere down the road, and they’re gonna want to be able to, frankly, have you exit that business. So you need to be thinking about that and be cognizant of that, as you enter into a relationship with equity. And I guess I would argue that you should be thinking about that more broadly, regardless of what you’re going to do in m&a. Because part of the reason you’re contemplating a merger or an acquisition, from a growth perspective, is because you’re adding shareholder value. And at some point, you’re gonna want to harvest that.
Ryan Barnett 11:57
Mike, is there anything that equity can do that cash or bank financing or, or a seller note can’t do? Like, some of the covenants for lending less? Or what possibilities does equity bring that others might not?
Matt Lockhart 12:16
Well, certainly, equity brings the promise of being able to do much larger transactions. So you know, we’re, we’re fortunate in this country, sort of in North America and in in our industry, that there’s it tracks a lot of equity investors, and in predominantly because a lot of these equity investors have done pretty well in tech over the years, and they want to stay in tech, or they grew up and exited a tech business and reinvested and certainly there’s lots of stories of family offices and private equity firms where people did really well, and then they reinvest their money back into tech one as a way to give back but also as a way to look for a broader return because they experienced it themselves. And so you know, as you sort of think about that, it probably means that you can do much bigger transactions than you might have otherwise been able to do. You know, our general rule of thumb, if you’re going to finance the deal yourself, and put it together, whether it be through seller financing, debt, financing, cash, sort of what we’ll call carry back financing options, or earnouts, you know, you’re, you’re going to somewhat be limited in the size of the deal that you can probably do in generally, you know, a deal about half your size is is not a typical, you know, we recommend, that’s probably the right level of risk for someone who’s going to use kind of more traditional financing vehicles, minus equity, if you’re going to do equity, you certainly can buy, you know, I don’t want to say the sky’s the limit, because it certainly will depend on your equity partners appetite for deals, but generally, there’s a much, much higher level of interest to do deals that are much larger, because their goal is to you know, build a pretty material platform or ultimately exit to a large buyer at some point.
Ryan Barnett 14:14
Great points. If we move it back over to the banking options, then maybe just start out with, let’s say some benefits, but also what are some limitations that bank financing. Now we’ve done quite a few deals, we’re working through one now that has some interest. Interesting, I’d say covenants, what are some things that a buyer should be aware of when they consider bank financing?
Matt Lockhart 14:41
Well, I know that there’s a lot of interest in SBA financing and certainly, there’s quite a few limits to what SBA financing can do for you and I’ll jump right in there. You know, the best thing and best place to start sort of traditional financing would be, you know, one have a good relationship with your bank and go talk to them about options. They may be willing to just because you have a long term relationship, financier deal with traditional bank financing where the bank carries the paper carries your loan. And that’s a great place to start. Typically, if you have a good relationship with your bank, which I’d encourage everyone to do, I think, you know, beyond that, even with a good relationship with your bank, oftentimes, a bank might want to backstop the paper with an SBA loan. And part of the reason that is is because the federal government guarantees that loan to the bank, in the unlikely event that you would default on it. So depending on the loan and the loan program and the timing, they’ll guarantee anywhere from 80 or up to 80% of that loan to the bank. And in some cases, in special circumstances, there was higher guarantee rate levels. And, and so those loans become, you know, pretty attractive for the bank, because they can write loans that they that their own loan committee may or may not be able to write, or have comfort in carrying on their own balance sheet. You know, the challenge with SBA financing from an operator’s perspective is that, you know, generally the SBA requires you to, in some cases, you know, the collateralization means that any of the assets that you own, generally have to get pledged in support of that loan, we kind of call it the all in provision, you have to be able to say, I will put the SBA as a second lien holder on all my assets. And not every operator wants that or cares to have that. But you need to know that that is generally the SBA requirement, even if that loan is wildly over collateralized. Now, they’ll certainly do it with it’s under collateralized, which is a big benefit to using the SBA to do a deal. But I think, you know, what we tend to find with our customers over time is that as they accumulate wealth or operating their business, or you know, different businesses, or they get older, you know, oftentimes the size of transactions they’re looking to do, they’re actually going to over collateralize the loan by pledging all their assets. So you know, that that can be a sticking point for SBA financing, they should be aware about your bank, if they’re gonna write a loan for you outside of the SBA may not require that. And a lot of it has to do with the relationship you have with the bank, and you know, maybe how much asset you have available, they may require to, you know, attach some assets, but not all of your assets. So, those are subtleties that you need to kind of work out with your bank. But I certainly think that, you know, debt financing is a great way to go because you can have an amortization, it allows you to do a couple things, one have an amortization that you can easily cashflow with the acquired business. Which means that the profits on a month a month, quarter to quarter an annual basis will be accretive to profitability, even after debt service, which is kind of where you want to go, right? Because then that allows you to invest to grow that combined business in ways that you can’t otherwise. And likewise, you know, it gives you an opportunity to probably be more aggressive in your negotiation with the seller, because you’re gonna guarantee more if not all of the transaction value upfront. And I think that anytime you can guarantee all the purchase price, whether it be through an for a loan from the bank, or maybe even what we sometimes referred to as carry back financing, or a loan from the seller, or a seller note, all those things are the same. You’re able to sort of fix the price, fix the purchase price, in any time, you can fix the purchase price, and sort of guarantee it for the seller. It’s good for them because they direct their deal. And that’s good for you. Because you can as a buyer, because you can typically negotiate a little lower price point.
Ryan Barnett 19:11
Those are those are all great points, Mike. I’d like to go back and just ask a question here on some of the issues with the bank loans. Can a seller roll some of their equity when bank loans or specifically SBA loans or are in play?
Matt Lockhart 19:32
Well, it’s certainly a possibility. You know, it depends on the bank. And what I would tell you is that, you know, the type of bank you should work with in an SBA environment. And it depends on the SBA rule. So there’s a few moving parts here. The SBA rules change fairly regularly. And we’ve seen them change over the years dramatically on what they’re able to loan, how much they’re able to loan, what program they’re able to loan out of. For what kind of company and the best types of banks to work with for SBA loans are those that are called an SBA preferred lender, and SBA preferred lender, you can find them actually on the bankrate.com. I think sometimes you can actually find them on NerdWallet as well. But I know that bankrate.com has a listing of SBA preferred lenders in your area. And the reason why you want to use SBA preferred lenders is because they make the lending decision, okay, the SBA does not. And so they take it to their loan committee, and they evaluate it. And they kind of manage and operate the rules of that loan, pursuant to their own sort of banking rules. And if you’re lucky enough to have had a long term relationship with a bank, that is also an SBA preferred lender, that’s sort of the best of both worlds, right. And so I would certainly contemplate if you’re thinking about doing SBA loans in the future, even, you might want to align your day to day banking relationship with one SBA preferred lender, we think ones that are sort of, you know, community banks, our experience has been, tend to be a little more nimble, a little easier to work with. Typically, those guys are range anywhere from about 250 million in assets to maybe, you know, 5 billion or so and assets, maybe a little more now in the current environment. As companies that you know, will, you know, they focus on small business, that are SBA preferred lenders are generally very, very good to work with on SBA loans. The challenge we run with banks that are not SBA preferred lenders is they have to send all the loan documents to a central SBA facility to make the loan decision. And these are people that don’t know You don’t know the business you’re trying to buy or understand the imperative about what you’re trying to do. And we think that makes it much, much more challenging to get an SBA finance deal, particularly in sort of IT services, tech enabled services, or SAS businesses, you’re just going to be challenged to get a deal approved, where if you get an SBA loan through a preferred lender, the likelihood it’ll it’ll be approved, if it stands up to the scrutiny of valuation and deal structure that the SBA requires is really high.
Ryan Barnett 22:32
Good stuff, you’d mentioned collateralization, and that being all someone’s assets, can you help me understand what all means? In that case? So you’re talking just the business?
Matt Lockhart 22:44
No, it means any real estate you might own, it may mean, automobiles, boats, RVs, anything that the SBA could attach to make sure that you’re gonna pay that loan back. Now, I will tell you that the SBA is not in the business of repossessing all your assets, so they can pay their loan back. Typically, if, you know, heaven forbid, something happens, and you can’t pay the loan back. You know, the SBA has been known to work with lender, with the lender, but also with the, with the data to figure out a payment structure so that they can get paid without having to repossess assets, but, but it is a sort of all in program. And for most people who are small business owners seeking to get an SBA loan, they have to be prepared to step up for that.
Ryan Barnett 23:35
Yeah, your personal guarantee in quite a bit in some of those cases.
Matt Lockhart 23:40
Yep. And includes all your business assets. And generally all of your what could be liquid personal assets, you know, anything that would be in a, for example, a retirement account, or 401k, you know, can’t be necessarily pledged to backstop these loans. There’s, there are a few exemptions or exceptions. There’s ways you can leverage 401 K’s to do m&a. I don’t want to get too far down that rabbit hole, but but for just a collateralization perspective, you know, anything that’s sort of in a in a retirement account or a brokerage account that’s been sort of tax tax deferred is not eligible for collateralization. You know, I think we’ve done a good job of sort of covering a bunch of options. So so as a buyer, when do you disclose to a seller how you are financing a deal or, you know, and buyers have options? They go in with options, but typically, they’ve got they’ve got a preferred path in mind in terms of how they’re going to finance a deal. You know, Mike, based upon your experience, Ryan, you too, I mean, when do you when do you talk about it? Right? When’s the appropriate time?
Mike Harvath 24:59
Well, You know, I believe that transparency and m&a is super important. And I think coming into a transaction, you need to be very transparent about what your plan is, in order to build confidence with a seller, if you’re a buyer, and, you know, sometimes it might flavor your offer. So, you know, what we haven’t talked about, much up to this point is, you know, how do you use a seller note, or seller, it’s often called seller carry back financing, as part of the consideration in the deal. And that goes hand in hand with an urn out, right? So up to a few years ago, you know, most deals had about at least 60%, guaranteed consideration or cash. And the rest was something else, right? Either a combination of an urn out, or maybe a carry back note. And, you know, I’d say in more recent times, in years, it’s been a lot more that’s been more cash are guaranteed, you know, as much as some, some studies say as high as 86%, of deals in recent years have been that way. But there’s no right or wrong way to finance these deals. But I think to your point, Matt, what’s important is to be transparent about what your plan is to find the deal, right up front, and let the seller know where you’re at. Because certainly your inability to get a transaction done, you know, isn’t good for anybody. And so you had to have done your homework as a buyer and talking to your bank at a time. Sometimes the challenges with that are that you can’t really initiate bank financing until you have a signed letter of intent. So you have to, you know, talk to your bank and understand what’s possible and make sure they have input on deal structure. And if they’re leaning in, based on the financial condition of your business, and the transaction and the financials for the business that you’re evaluating, then you can pretty confidently structure the LOI and talk to your seller about how you plan to fund it. If they’re in alignment with that, and they agree to the terms of the loi, then you can initiate your financing approach. The only exception to that would probably be, you know, equity financing, it’s hard to enter into a transaction if you haven’t already aligned around equity financing, and you have that capital available. Because typically, that is a more challenging exercise. And you kind of have to have that capital partner by your side and already signed up so that you can go to that seller and talk to them about structuring based on how that equity partner would be comfortable. But to answer your question much more directly, Matt, I would say you want to be very upfront about the reality of how you plan to pay and maybe even some of the challenges you may be facing yet, so that everybody can go in the eyes wide open.
Matt Lockhart 27:53
Transparency is key in financing and everything else, right, as we’ve talked about a number of times.
Ryan Barnett 28:00
The one thing I’ve noticed here, Matt, and I think it’s a great question is that if a buyer plans to attain a large amount of debt financing, the seller wants to ensure that the operations of the business are still taken care of. And then growth consoles succeed to it, especially if there’s any kind of earnout in the vault. So if you find a deal, that is, it’s a great deal, both work well together, but you leverage it to the point where you have such a big debt service dollars, give me a little scared off on that. So we see that quite a bit.
Matt Lockhart 28:37
Think that’s part of why we say you know, a 50% of your size, right? You know, because the seller needs to be comfortable, they’re going to do reciprocal diligence on you as a buyer, and make sure that you can actually fund this thing, right, either their representative or their, their partner advisor is going to do that work, or you’re going to do that work. And you’re gonna want to make sure that they’re solvent, that the business as the parent has access to that capital, that you’ve done a screenshare looked at accounts, if they say they have cash available, if they really have it, you can’t take their word for it. Because you might get down this rabbit hole of diligence and they can’t read the money or can’t find the money or their bank financing falls out of bed, you have to make sure they’re solvent. And beyond that, you know, when they’re carrying that debt service, so they can service it in a meaningful way. And that has a lot much a lot more to do with sort of the combined financial picture as well. Now, what you should know is that a traditional bank isn’t going to enter into an arrangement with a with a borrower where they have a high probability of getting in trouble because the bank’s on the hook for that money and they’re at risk too. So you know, you need to know that. But it does require that you’re going to have to do some diligence and be smart about how much risk is that buyer taking on it? Do your transaction? And is that something you’re comfortable with? Particularly, if there’s some amount of money that’s in an urn out to you, or some sort of seller note that requires that that business stay healthy for a while?
Ryan Barnett 30:15
That’s a great point. I’ve got one last question here. And Matt, feel free to ask anything as well. But if someone has enough cash on hand to finance a deal, should they just use that? Or is it you’re better off considering multiple options?
Matt Lockhart 30:33
Well, it depends a lot on on the buyer, right? You know, the cheapest way to buy a business is all cash, right? Anyway, look at it, you have the most leverage, you don’t have a carrying cost associated with a loan, whether that be from the seller, or a bank, which you got to pay interest, right on loans, whenever we get a loan, you’re paying interest. And if you have it available, and it’s not, you know, gutting your your balance sheet to, you know, into your rainy day fund to the point where you’d be nervous running your business at that level, then yeah, the most cost effective way to buy your business is for all cash, particularly if you believe in the transaction. And I would tell you that, you know, if you don’t believe in the transaction, regardless of how you finance it, you shouldn’t do it, right. So you oftentimes find firms that are very diligent about how they look at their internal rate of return, their sort of return on investment return on capital, you know, that’s what advisors like revenue rocket, do, we help you figure that out, and then they use the leverage, you know, cash is king, right, they use leverage to negotiate an aggressive transaction, they pay for it and move into, you know, combining the business, it does make the transaction must less complicated, on a variety of fronts, it does make integrating the business much easier, it’s just all kinds of things that makes a lot easier for you, as a buyer to be able to facilitate now, there’s things are kind of a close second. For example, buying a firm with a seller note or carry back financing is also a way to guarantee the purchase price, you will have to pay interest on the portion that’s the note from the seller, but in the eyes of the seller, typically that as long as they have comfort with your solvency from a financial perspective, and the likelihood of that to continue, they generally be open to that because it’s guaranteed, right. And they’re a secured debtor, you know, with your business. So the likelihood they’re going to get paid, if you’re, you know, operate a strong business is high. And they’ll do that. And that’s a great way also to get a good return, you begin to get into an urn out which a lot of people as buyers, yeah, we really like earnouts earnouts, tend to benefit sellers more than buyers, particularly because, you know, if you believe in the transaction, and the combination comes together, and you guys will crush it together. And you know, one of the premises we often talk about an m&a is that if you can get to a place together that you can’t get apart, that’s certainly a strong strategic imperative to do a deal. And if that place means you’re going to quickly grow revenue and profit in earnout, is certainly going to benefit the seller in a very meaningful way. And that’s great. Now, so there’s trade offs to the buyer, it means you’ll pay more, right, you’ll pay more for that transaction, you need to know that going in, it’s likely that you will pay more using it or not. But the trade off is to that is you’ll typically de risk that transaction should, for whatever reason, the deal underperform in the future versus your estimates. And so there is a benefit to you. But I would just say that, most of the time, you know, and most most of the studies we’ve seen are sort of mid 80s percent 85 86% of the time, earn outs get paid out at or above sort of their intended value. And so you should understand as a buyer how you’re using that and be able to be open to the up to the likelihood you may overpay. You know we a couple of podcasts ago we talked about readiness. This is an important piece to readiness. And here we are we’re we’re moving into 2023. I think we all anticipate just a continued very active marketplace thing that more and more firms in tech, overall tech enabled services in particular, are recognizing that inorganic growth is absolutely critical not to be just in the top quartile, but just to be competitive. And so I think great discussion, guys, lots of options. readiness is super important. And we’re here. It’s matter of fact we’ve got an unbelievable and growing readiness program. So, great discussion! Thanks, Matt. Yeah, I think so, you know, we’re, we’re here to help message I guess I send everybody is listening is that, you know, even if you’re contemplating maybe doing some deals in the future, and you don’t know if you’re ready, or you think that it’s gonna take you a while to get ready, we certainly have a active strategy practice that works with companies that are working to be ready to do a deal, whether they’re gonna buy or sell years out, and they want to be prepared. And certainly, we can help you with that, as we’ve helped many companies over the years do that. I would also just to add sort of in closing that, you know, we oftentimes get asked question, you know, do we see, in 2023, the market, you know, going down or cratering or valuations being impacted, and, you know, all this stuff, and I would tell you that in this sort of world of IT services, tech enabled services, we don’t see that we don’t see a situation where things are going down, I think it’s has a lot to do with sort of a perfect storm of limited, you know, technical talent and, and solutions, that companies need to fend off inflation and, and fend off being more efficient with fewer employees and all that stuff. So, you know, certainly we don’t see a lower demand, lower demand for m&a or even lower valuation multiples, at least in the sectors that we operate in. And so I would encourage all of you to, you know, keep a steady hand on the tiller and keep running your businesses and growing your businesses like you have and and certainly contemplate the strategic imperative of buying other firms to continue to expand your footprint and when the time’s right, you know, know that if you’re going to exit that it’s a very, very healthy market. And I think you don’t have to worry about trying to time the market as much as certainly some sellers are contemplating right now. Any thoughts, Ryan before we tie it up?
Ryan Barnett 37:03
Nailed it all. I’ll pass it back to you. Thanks for Thanks for a lot of great insight and, and thoughts on this topic. So back to you, Mike.
Mike Harvath 37:11
All right, guys. Thanks a lot. I appreciate it. Well, that will tie a ribbon on it for this week’s Shoot the Moon podcast. I encourage you guys to tune in to all 100 Plus episodes of our shoot the moon podcast on your favorite outlets for podcasts. Encourage you to tune in next week. Thanks a lot and make it a great week.