Eric Van Dam
speaker
94 appearances
1 recordings
1 series
first heard Nov 2024
last heard Nov 2024
Eric Van Dam’s voice in public audio — every appearance, attributed to the second.
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Appearances
Now you are selling a complete system with the motor, the sensors, all the different components that go into it. The other thing that your sales team did a great job of is you gave the customer options. You gave good, better, best options, and you empower the customer to make decisions.
But you also educated the customer on what were the benefits and the value proposition of choosing a more premium or higher-end garage door. And so you guys, which was driven by your strategic initiatives inside the company, were helping drive up the average ticket. But it wasn't just purely pricing. It was some of the initiatives that you guys put in place.
Yeah, I think that's an important aspect, too, for business owners that want to sell their business is making sure that they have an advisor who will roll up their sleeves, really get down into the weeds and really understand the numbers, the business drivers so that they can explain and really help the ultimate investor and buyer universe really get more comfortable with the numbers and the story overall.
And that's something that we pride ourselves on.
The market is a lot different today than what it was in 2020 and 2021. So it is really important to make sure that you are integrated. And you asked the question earlier, what does it mean to be a platform? What it means to be a platform is really having what I would refer to as a shared service center at the top.
that can really help the companies that you're buying take their companies to the next level. And so as you think about the shared services, you could have a VP of marketing or a chief marketing officer that's really going to help companies analyze and assess how they're allocating their marketing budget.
A, are we underspending or are we overspending or are we allocating our marketing budget inefficiently? Are there higher return on investments that we could be allocating our dollars to drive more leads?
helping them get better purchasing, buying contracts with equipment or insurance and benefits at better pricing than where they're at today, helping them with best practices across their sales process, maybe implementing technology with a quoting application. helping them with recruiting and training and really taking the company to the next level.
But if you're going to be a platform and you really want to do add-on acquisitions, it's important to figure out how are you actually going to help those companies grow and take it to the next level. And having a shared services team that can really help those companies is just an important aspect to think about.
And one of the things, I mean, private, Tommy, you'll remember this from your process, but in almost every single deal that you should do, you should ask the seller, what are you looking for in a partner? Private equity firms ask you that question in every single meeting.
But you should ask, if you're going to buy a business, ask them, like, what are you looking for in a partner and how can I add value? Maybe they're having a hard time getting trucks. Maybe they're not getting enough leads. Maybe they're not getting enough employees.
And so you can figure out how can I help them recruit more employees or how can I help them get more leads or how can I help them get more trucks, right? But if you really want to be, you know, a platform and help companies out, figuring out what those bottlenecks to growth are and how do you unlock them.
Which subsector are we talking about? HVAC, garage doors, roofing? There's not a one.
Yeah. So I would say best in class from a gross margin perspective for HVAC and plumbing would be somewhere between 50% to 55% gross margins. And then from an EBITDA margin perspective, usually call it like 18% to 20% is best in class. We've seen some probably as high as 25%. But in general, that's what I would say.
I think it's important to unpack the numbers. What is driving that? And for instance, with this one particular company, they had a little bit of a unique marketing approach and they had an extremely high ROI on the marketing dollars that they were allocating. And so there was a good explanation for why they were driving that, but they were also at 55% gross margin.
So they were at the upper end from a gross margin perspective from where they should be. And more of that trickled down to the bottom line.
it's just intense and you probably remember it, but think about all the different advisors that all the various buyers had. They had accountants, they had tax advisors, they had insurance and benefits, they had lawyers, they had third-party consultants doing, you know, market assessments and industry research. And so,
The one thing that we always tell our clients is don't bring a knife to a gunfight, right? It's really important to assemble your deal team, get the right advisors. And so we were representing you as an investment banking advisor, but we also hired EY Parthenon to do the market study. We had FTI Consulting doing the quality of earnings analysis.
And there was so much preparation work that really went into it so that we could be well prepared for the due diligence process and really ensure that we have a very successful outcome that also has speed and certainty to close.
We normally say it's six months from hire to wire. So from the time we get hired and sign an engagement letter to the time you get wired all the funds that hit your bank account, it's about six months on average. There's some processes that potentially could move a little faster and some that may move a little bit slower, but on average, six months.
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