Owned and Operated #152 - Advice for Selling a Home Service Business

In this episode of 'Owned and Operated,' host Jack welcomes John and Justin from LEAP Partners to talk about what goes into the world of private equity home service business roll-ups. The two share a useful look into the importance of understanding your business's financials, the role of culture in acquisitions, and the unique approach of LEAP Partners in supporting business growth. Whether you're a current business owner or looking to buy or sell, this episode offers practical advice and inspiring stories of success in the home services industry.

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Key Takeaways:
- Understand your financial performance for better business decisions.
- The importance of maintaining company culture during and after acquisitions.
- Entrepreneurial drive and the willingness to learn are key traits for success.

Episode Hosts: 🎤
John Wilson: @WilsonCompanies on X
Jack Carr: @TheHVACJack on X

Episode Guest:
Justin Deese: On LinkedIn
‍John Cerasuolo: On LinkedIn
‍Learn more about the Freedom Blueprint Podcast
Learn more about LEAP Partners

Owned and Operated Episode 152 Transcript

‍John - Leap: You don't learn from other folks mistake. You're probably going to make,

John - Leap: I don't want someone who's good at taking orders are good at doing what they're told. That is not a good leader of an organization, but I really want folks with that kind of drive that want to build it themselves are so committed to that, that they want to learn everything they can from anybody.

John Wilson: Recently we've been buying off supply house. com and we've been able to get plumbing HVAC and electrical stuff off there. And my biggest concern was timeliness, hey, if I need this thing pretty quick, can I get it? And you for sure can. So that was awesome. So deliveries are fast. They ship coast to coast and you can call them and you can get expert support with real people, which is awesome.

John Wilson: So check out supply house. com for buying The stuff you need.

Jack Carr: Welcome back to Owned and Operated. We have John Lio, so not John Wilson. We have Selia today. He is with LEAP Partners and Justin, who is also with LEAP Partners here today. Welcome guys. How's it going?

Justin - Leap: Wonderful.

Jack Carr: Awesome, Jack.

John - Leap: Good to see you bud.

Jack Carr: Yeah, good to see you as well. A little history, John. John and I talked a really long time ago, right when I started up the business. Just in terms of meeting people and going out, and talking with industry folks. And so it's really come in full circle, having him back on the podcast months and months later.

Jack Carr: So really happy to have you, John, can you tell us a little bit about lead partners, what it is, who you guys are the story.

John - Leap: Sure. Happy to do it. And yeah, it is interesting. You were one of the first. Guys, I'm new to the industry when I started Leap Partners, it's now been three years. So Leap Partners, we are we are a team that is building a southeast regional HVAC and plumbing business by acquiring really strong, exceptional companies, small companies across the Southeast.

John - Leap: So we launched this business right about three years ago, right when we first chatted as I was trying to meet as many people as I could and learn as much as I could about the space. My background is in doing this kind of thing, but in different industries. So we launched about three years ago and the core part of the team is a group that I've worked with before that we've been very successful in this kind of adventure.

John - Leap: So we started out our first acquisition was a company in Alabama. We've done 17 additional ones after that first. And we have what will be our 19th. Acquisition closing actually tomorrow. So you'll see an

Jack Carr: announcement on that for, congrats. That's huge. That, that is extremely, I don't want to say fast, but it is very fast paced for this industry.

Jack Carr: What do you think is part of that success? What is, what's helping you guys drive That's success at lead partnership,

John - Leap: a couple of things. One is that the court team that I have, and that includes Justin have done a lot of this before. The leadership team is very well versed in a rapid pace of identifying.

John - Leap: Good companies that are a fit with us, working through deals, integrating them into the business, and then moving on to the next one. That's usually the hard part. It's not hard to buy companies, the real work starts after you buy them and you get a bunch of companies together. And I think a lot more companies fail at that than.

John - Leap: The ability to just go out and spend money and buy companies. So one of the, one of the elements of success is we just have a team that that's done this many times and is very practiced at the whole process of identifying companies, negotiating deals, closing deals, and then integrating businesses.

John - Leap: But I think the bigger. That's the mechanical part of why we're, I think the the real part of why we're successful is the energy, the spirit, maybe you call it the culture. That we've developed. Jack, you've had a little chance to see a little bit of that as we've grown. Justin, in fact, was an owner of a company we acquired a little over a year ago all of our businesses are continue to be run by the owners of the companies that we acquired.

John - Leap: That's part of our model is we partner with owners. Who are excited about the opportunity to take some money off the table when they sell for sure, but keep some of it invested in lead partners. So all of our partners, former owners of these companies are shareholders in lead partners and share in the success that we're having.

John - Leap: And we just built a great culture that that encourages best practice, sharing very transparent about information. And and just has a commitment to driving excellence across the organization. And when you do that and do it well, it not only generates enthusiasm and excitement and energy and confidence among our existing team, but it.

John - Leap: It helps us to attract great owners, because I think if we can get an opportunity to share with them what we're doing and give them an opportunity to get some visibility to it, I think for the right kind of people that we're looking for, it's a pretty exciting thing to think about joining an organization where you continue to basically run your business with an awesome team around you.

John - Leap: Lots of help, lots of support and and just a winning organization to be a

Jack Carr: part of. Yeah, that's an awesome key to bring up because I know that through our networking groups, through our Facebook page, through our workshops, one, there's this one key that keeps floating throughout all of the ownership team in every, Every kind of group we've ever been in and it seems to be that being an owner in this industry is lonely there's very little support.

Jack Carr: There's very little Team that kind of works with you It's just you have you know at the ownership level and trying to figure everything out and it seems like leap Can provide a little bit of that on the back end. Not that I'm selling leap or anything like that. I just want to say to all the listeners out there John is a very, being very humble here.

Jack Carr: He has a great team who I talk to decently regularly. I'll talk, send Alex a text message. He lives right down the street from me one of their marketing guys. So very good group of people that has been able to keep that, I don't want to call it the anti PE feel, but it is a bit like that.

Jack Carr: You're not coming in and changing everything up. You're coming in and supporting. It feels

John - Leap: and Justin's been through that. He can probably speak a little.

Jack Carr: I was just going to say, Justin, do you feel like that's been the case or how has your experience been with this whole process?

Justin - Leap: So what's interesting is with the acquisition with leap, this wasn't the first time I've sold a plumbing business. So I've been on both sides of it where it's not gone well. And then with leap it's really gone well. And I think the biggest thing about being able to grow the way.

Justin - Leap: Leap's been able to grow is they're literally in a support role, not a coming in wreck things role. So Jack you know quite a bit of the owners you've been to some of the events, across all the different branches, no one's losing people when we were acquiring. And I think that's the big kind

John Wilson: of

Justin - Leap: indicator that Leaps onto something really good because they're not losing people.

Justin - Leap: And that's typically what happens is when you when you have an acquisition or you roll into a larger community, which is really what this is. You end up losing people and none of us have lost any team members because of it.

Jack Carr: Yeah. You hear the horror stories on the back end of a private equity rolling up somewhere and Chicago or New York, then all of a sudden their 40 man team is now a two man team.

Jack Carr: So has that ever happened to you there, John? I don't know if you'll admit it on air, but.

John - Leap: So no, thankfully it hasn't I've been involved in a lot of deals in previous. Operations that we've had, you have an, you have a chance over time when you do this to see a lot of mistakes, other people made.

John - Leap: And if you don't learn from other folks mistake, you're probably going to make them. Yeah, that, and it always confounded me because some of these guys spend a lot of money buying companies and seem to don't seem to be that thoughtful about what it takes to build the culture that folks want to stay with.

John - Leap: When you buy one of these businesses. What you're buying is people. The brand name has some value for sure, but the big part of what you're buying is the people in the team. And that's where the focus has to be to support them, to give them an environment where they can be happy and successful, enjoy what they're doing, inspired.

John - Leap: To do better opportunities to grow their careers and we spent a lot of time thinking about those kind of things. Yeah,

Jack Carr: of course. And so with that, this is always such an exciting conversation for me because we deal more so with either new owners or people who are searching to buy businesses.

Jack Carr: We very rarely talk about. The exit side of this business, which is for a lot of people getting into it is the end all be all goal. But that being said so you buy these businesses, you keep a lot of the ownership team or all the ownership team in place with incentives.

Jack Carr: How do you maintain a standard? Standardization across the portfolio companies while still allowing them to retain their original identities.

John - Leap: Yeah, so that's a challenge. I'll share some thoughts. And I know Justin probably has some things like that, too. So that is the big challenge. Now, what you have to remember is we are always.

John - Leap: We're always acquiring companies that we've 19 companies in a little less than three years, it's every few months, there's a new company joining. So you always have companies that are at one stage or another of that process, right? So on month one, the challenge is making sure of payroll and benefits.

John - Leap: And, bills are going out, there's a blocking and tackling stuff. You're not spending a whole lot of time on, on some of the more challenging parts of the operations. But then as you get into the six month point or the one year point or the 18 month point, you get further down that curve.

John - Leap: And and we have a lot of efforts to not so much. I don't like the word standardized. To educate all of our owners, our partners on tactics and strategies that they can use and, in a lot of cases there's some of those that work in some environments and don't work at others.

John - Leap: You might be in a smaller market. You might be plumbing versus HVAC. You might have a little different mix of business. So it's not about taking our template and saying, here it is, you got to do it this way. It's about, Hey, let's get together. Let's talk about it. Let's see who's doing really well.

John - Leap: What can we learn? How can we all get better?

Jack Carr: Yeah. That's a great point because you can definitely have right best practices that reverberate. through all those companies. Justin, how was that process for you guys? So leap came along when you guys were a certain size. I don't know if you feel comfortable talking about that.

Jack Carr: You joined them and then were there a lot of changes? How did that change management feel from I know your bosses, now your new boss is sitting next to you here on the camera. So only say nice things, but like in all honesty, how was that process going from the way you ran it to now getting some best practices from LEAP?

Justin - Leap: A big part of it was, again they slid into the support role. That was really where they hung out the most was the support. What do you need from us? How can we help you? And I think from the best practice standpoint, what's nice is that as a group, we all know how each other's doing.

Justin - Leap: It's one thing to be in a best practice group and you're like, yeah, look at my numbers. And it's another thing when you're like, there's no hiding from what you got going on. So for us as a community, cause that's really what it is. As we look across the different branches and we see how other people, where they're winning, where they're losing, where they're struggling, what ends up happening is from a leadership standpoint, leaders end up asking, Oh man, I see your booking rate is way higher than mine.

Justin - Leap: What are you doing? And we that's really how we're trading a lot of best practices. So it's not a, Hey, do this way in order to win. It's more of a, from a leadership standpoint, going to other leaders saying. How do we win in that? And I'm going, Hey, here's what I've done. Here's what.

Justin - Leap: Here's what's worked. Here's what's not worked and letting them go and implement it.

Jack Carr: Yeah, that's awesome. I think that's one of the big keys that it's what attracted me to lead partners and being close to y'all is really at the end of the day it's the support system behind, right?

Jack Carr: I think that we don't have that support, so it's very nice. It's a very attractive trade to be able to have that and then have a community around, which is what, I think I do a decent job at networking and building that just naturally, but I know a lot of owners have trouble in that sense.

Jack Carr: And so there's this micro ecosystem that's grown up around HVAC masterminds and HVAC workshops to really help people grab that. And it sounds like you guys have just naturally built that in, which is really neat. John, so you've, you're at 19 companies what's the goal?

Jack Carr: Because generally, right, private equity is on a five to seven year, they're rolling up all of these companies, then they exit and to a bigger private equity what's the plan for you guys?

John - Leap: Yeah. So we are incredibly fortunate to have a great team. Partner as our majority investor. It's a, it's essentially a wealthy family.

John - Leap: You might hear referred to as a family desk. They're out of Chicago. And unlike what people I think generally conceive when they think about a private equity company their approach is much different. And a good example is that exit question. And you're right. A lot of private equity companies, they raise a fund.

John - Leap: You're somewhere you get bought somewhere. During that seven year fund cycle, you've got to cycle out at some points so they can return money to their investors and, the timing to sell is in many cases, forced on you. The beauty of our relationship with our investor concentric equity partners is there, they're very patient.

John - Leap: Their approach is when the management team decides. It's the right time to exit. That's when it's time to exit. And they really are a partner with us in that respect. So our original, when we got together, of course, we put together a business plan, our original business plan had a five year horizon just because, it's a little hard to look out, a whole lot further than five years.

John - Leap: So it wasn't that we were building to sell in five years. It was, Hey, here's a plan where we'd like to be in five years. We're actually, we're three years in and We're well ahead of that original plan. We think there's a lot of runway for us. We think our model has in a sense been proven out.

John - Leap: We love the culture we're building. We think, it was a little bit hard when we first started cause no one really knew us, but now that we've done so many deals and we're getting a little bit of our reputation as being a good partner, so we expect the momentum to pick up as that continues. So there's going to be an exit at some point.

John - Leap: It's going to be when we decide it's the right time and we get to the right size. It'll be at least double the size that we are now maybe somewhat bigger than that. But there'll be a right time when it's time to exit and but it's going to be a decision made based on the facts of, Our company and the industry, not something that gets thrust on us because sometimes it's time.

Jack Carr: That's nice because I know that's a big we were joking about it the other day with some other owners about how if you sell towards the end of the year it's always a better deal because in the beginning of the year, they've P firms have located a certain amount of companies and they need to close out a certain amount by the end of the year.

Jack Carr: And so the price goes up as companies they get closer to that close time. That's really interesting. From your level you're working with really large family offices. You have, you've been in the industry three years now you're surrounded by owners. What kind of trends are you seeing in the HVAC plumbing industry that either a made you move into it out of I don't think we mentioned it here, but you were in home security before.

Jack Carr: So what made you go into HVAC and plumbing and are there any trends right now that you see that others might be overlooking?

John - Leap: Yeah. As you mentioned, my background is in, in home services. I, along with a bunch of folks on my team led a home security company that also had a Southeast footprint.

John - Leap: We did 45 acquisitions over 10 12 years. And and when we exited that business we basically what we did is we looked around at all. The different home service companies for some, I think good reasons. We decided getting back in home security wasn't the right path. So we looked at every home service business.

John - Leap: You can imagine from gutters to windows, to roofs, to landscaping, to pest control. Just to everything talk to a lot of smart people who had been. Had some experience in those spaces and decided HVAC and plumbing was the right place for us for a couple of reasons. One is it's our model is to buy what many companies doing what we're doing would consider very small companies, right?

John - Leap: So we're not, we're buying companies that have, in some cases, 30 or 40 employees, right? So we're not buying big businesses. Some are a little bit bigger than that, but our range is much smaller than the sweet spot for most of the other buyers that requires to be successful in industry that is heavily fragmented.

John - Leap: And and HVAC employment certainly met we, we wanted an industry that was at least. Describe it as you can, but recession resistant, nothing's recession proof, right? But something that was a a necessity not a kind of a discretionary spend. And some of those home services are more discretionary than others.

John - Leap: So another reason that we really like HVAC and plumbing. And and the we're a Southeast focused business. We really like the Southeast just because of the demographics of what's going on in the Southeast. We think it's a great place to be and we think that also argued for an effort in this direction with HVAC and plumbing.

John - Leap: And so after all that research, we came to that conclusion and then quickly got to work trying to identify. Companies that would be a good fit for us.

John Wilson: A few months ago, we got our call center on Avoka and Avoka is a AI call center solution for home service companies, just like me. And probably just like you, they have a couple of different products, but the one that we like the most is their coach product, which listens to every single phone call and runs it through a rubric to help our call takers improve.

John Wilson: And this is a really big deal because we take hundreds, sometimes thousands of phone calls every single day. And it's just too much for our trainers and managers and leads to keep up with. Yeah,

Jack Carr: I think it's a fairly straightforward thesis, right? That's what a lot of people have come rushing in the past few years is they've seen this recession resistant business model mixed with the high fragmentation.

Jack Carr: And they said, Hey, let's let's start working on that. Start working. I know that was one of mine as well. Because if it's between cleaning your pool and getting your AC on in the middle of summer, I'm getting my AC on. There's no question about it. The pool goes green. The grass grows high and I sit inside nice and cool.

Jack Carr: So that's amazing. I think that we're all aligned there. Justin, how did you originally get into plumbing? Were you born in the trades?

Justin - Leap: I was not. When,

Jack Carr: what's your backstory a little bit? So

Justin - Leap: I actually started a company in Atlanta about 22, 23 years ago. Actually still own it today.

Justin - Leap: And we did appliance installs. It's all we did. We put in dishwashers, we put in microwaves and we put in a bunch of them. And it was such a good industry for me to first get started into in the home service space, because I was doing so much big box retail that I couldn't control pricing, so the only thing I could do is build efficiencies around how we were doing these things.

Justin - Leap: So I finally got that business to a point where it didn't really need my attention or my focus. And I started to look for something that was similar. very similar. We were having outsource a lot of stuff to plumbing and I thought plumbing, that sounds like a pretty cool gig I could do. And so we we started leaning in and doing a lot of work on the plumbing side.

Justin - Leap: And then we had that for probably six or seven years and we ended up selling the to a much larger competitor. And and then we launched Paradise Home Services about 2019. We launched Paradise Home Services and one of the big things we wanted to accomplish with Paradise was that we wanted to also add HVAC.

Justin - Leap: And that's something that we hadn't done in the past. One of the stories with leap that really attracted us to them is the business that I sold a number of years prior to starting paradise. We went and got a lot of our team from, we call it 1. 0 from 1. 0 which is a lot like what John and the team did when they launched leap, they went and said, Hey, you know what, I've got people I like working with.

Justin - Leap: I trust them. I like going to work with them. I like winning with them. Let's do that. So it's a lot of what we did. So that's the cliff note version of of getting into the trades. I definitely have not a trades person. I'm probably more on the heavier on the sales side than anything else, but it's always such a good, it's always such a good industry from it's a need, right?

Justin - Leap: Customers, customers need it, and they're not going to go without certain things. They may not get the 8, 000 fancy toilet that, does all the stuff. But if your drains are clogged you're going to do something about that, or your AC is not working. That becomes a priority really quick.

Jack Carr: Exactly. And so at what point, I know this is a question that we get a lot. What point was the decision made that you guys wanted an exit? Did you shop it around? How did that look from The 32, 000 foot level of I'm running paradise leap reached out to me. We reached out to them via, putting together a CIM and shopping it through a broker.

Jack Carr: How did that process go for you?

Justin - Leap: We weren't looking to sell. We ended up doing the deal quite a bit earlier than we originally anticipated. Just because with the different groups we talked to, we knew number wise where we had to be. It's funny because when we first sat down and met with Leet, there was just this really good connection.

Justin - Leap: And it was you know what, we like their story, they really like our story. There's a lot of similarities to it. And so we ended up making a deal pretty quick for my business partner and I. Especially with my wife and I, like we're getting into that season of life where the kids are getting out of the house, my sons and the Marines.

Justin - Leap: My daughter is about to go to college, which she just got accepted to her school this week, which is awesome. That's awesome. And it was really about liability. We started having conversations around liability and next stages of life. And taking some chips off and really being a leverage, being able to leverage as we grew because we grew pretty quickly.

Justin - Leap: It was nice to have a partner to be able to leverage some of that liability on versus it being on my partner and I, because at the end of the day, when it was just us. It was us, like there was nobody else.

Jack Carr: And so with that so you guys made the decision, they reached out to you you met with them, talked it through and decided, hey, this was a great idea.

Jack Carr: Since then what has growth looked like? Because that's always a question that I have is, if I could not worry about HR, not worry about marketing, not worry about, all these things that the owner worries about that leap ends up picking up or another group and we're just leaps here today.

Jack Carr: But as leap ends up picking up, what did growth look like after that? Did you see the growth that you expected or when you were able to focus down or outcome?

Justin - Leap: Yeah. So for us and really any of the other branches, I think one of the big advantages is that we can focus on We can focus on revenue generating and driving the businesses versus the insurance audits.

Justin - Leap: And, oh my gosh, I need another truck. That's a, that's now become a part time job where now we'll go, Hey, we need another truck. And then it's somebody else's working on it. So I think really for us and the other branches, it's more about just being able to stay. I want to say really for a lot of us, the reason we got in this industry anyways, we didn't get in the business to deal with the taxes and the insurance and the fighting with the audits.

Justin - Leap: And what do you mean you don't cover that insurance company? Look at this bill I pay you every month. That's not covered. I think that was, I think that's been a big win for everybody. It's just being able to focus on that part of it.

Jack Carr: Yeah. So in terms of actual numbers, organic growth, did you guys track that?

Jack Carr: What where do you like how has growth afterward? Do you feel like you actually have measurable? I don't know what the timeline horizon is either. If you're not able to speak, I get it.

John - Leap: I happen to touch on it. So our objective is to organically grow 10 percent a year. Okay. Now, again, think about that, about all the companies we have and where they are in this cycle, they're.

John - Leap: The first couple of months after acquisition is, a little bit of a distraction as we're getting some of the original integration done. And then there's progress that comes after that. So we have companies that are, various stages of that cycle. Now, quite honestly as.

John - Leap: I'm sure most of your listeners know the last two years have been pretty challenging in the space, right? That hasn't been the kind of growth opportunities that we saw in 20 and 21 and 22. So we're shy of that 10%. We're growing we think appreciably faster than the market, but not quite as fast as we want.

John - Leap: That, that forces us to challenge ourselves to think about, what else can we do to to accelerate that growth, regardless of what the weather or the market conditions or whatever, every market happens to be given us and that's been a challenge it's challenged a lot of us here these last couple of years, but but we feel really good about where we are and especially about the foundation that we're building for this just steady, sustainable.

John - Leap: Kind of organic growth that we're seeing.

Jack Carr: Yeah, especially as you is that 10%? Like a cumulative total across all brands. Yeah, so I mean at that size That's not anything that we haven't heard of from other large single like singular size competitors. I think Hoffman talked about it pretty openly on here is that their large a hundred million dollar brand saw something very similar to that size or that amount of growth, but their Nashville location, their smaller.

Jack Carr: Greenfield location was growing crazy like 50 Which I think it's a lot easier to get those numbers in the smaller stage and harder once you know Yeah, go from 20 million to 40 million is a lot different than one to two.

John - Leap: Yeah Hire one extra crew and yeah,

Jack Carr: exactly That's three more leads a day for a whole year is not versus when you tap out LSA and you've used all your PPC and you're dumping 80 to 90 K into, to Thumbtack.

Jack Carr: Yeah, no I'm understanding of that. And, but so how are you managing though? You do have some at least when I was at the leadership team dinner, there was a few guys there that were in that kind of smaller sub 10 category. How are you supporting them in kind of their hyper growth movements?

John - Leap: Yeah. So it's, there, there are different needs from that support standpoint. Depending on a lot of factors and sizes, a big one, right? So when we acquire a company, it has a dozen employees as opposed to one that has 50. What the smaller company needs to help them accelerate growth is often very different.

John - Leap: It may be more recruiting. It may be more, maybe they were good at marketing and had trouble recruiting. Maybe they're good at recruiting and had trouble marketing. Maybe they just didn't have the systems to support it.

Jack Carr: Yeah.

John - Leap: So every case is a little bit. And what we try to do is tailor our efforts to.

John - Leap: to the specific needs of that location, that team, it may be just leadership support, right? They may need some leadership training along those lines. So we try to give them what they need to help put them in a position to grow.

Jack Carr: And so a lot of our listeners are, sub, I'd say most of them are sub 10 million.

Jack Carr: A lot of them are sub 5 million, even smaller than that. With that, A lot of them are dealing, they're four or five guys, six guys, they're going through lots of headaches day to day. As they grow, it's my belief that putting in the systems in place for the end goal is extremely important. So that when you get to the end goal, you're not switching over to service Titan that, 10, 15 million, it's much easier to switch over at 2 million.

Jack Carr: So with that being said, what Are there any big items as you've purchased and you've done 45 in the security industry, you've done 19 in plumbing and HVAC, is there anything that, any advice that you would give to smaller companies to say, hey, start working on this now you're the right size, this will help you once you get ready for an exit?

John - Leap: Yeah, there's a whole host of things. I'll mention a couple of Justin probably has a few thoughts on that too. Um, the first is really understanding your business and understanding the financial performance of your business. That's it's again, when you're running a business and you're in the middle of a day to day, sometimes it's hard to find the time to to structure your financial performance.

John - Leap: Metrics your financial statements so that you really do understand how the business is doing, what your margins are, make sure that you understand where your costs are that's often a big part of the problem because what companies then often will find out when they start looking at is.

John - Leap: Holy cow. I have not been making any money in this area. Why don't I stop doing that and start doing more of what's really driving profit? And sometimes owners don't find that out until they decide to sell. And then someone digs into their financials and explains that to them. So if I was going to say one thing, it would be that understand your business and in particular, understand where you're making your money and focus on that because you can really improve your financial performance if you sometimes shed on profitable segments and just pour that energy and effort into areas where you're more profitable.

Jack Carr: I think that's a great piece of advice. We talk about it all the time is when, we have a lot of people we work with who say, Hey, We really want to go into this trade that, the squirrel mentality, the shiny object syndrome, and now they're doing, Hey, we're plumbers, but now we're doing appliance repair and now we're doing this and now we're doing that.

Jack Carr: And by the end of it, they're doing commercial new installs, plumbing, HVAC, electrical. They're just touching everything and a lot of them are absolutely unprofitable and takes away from your core business, to be able to grow. And I'm sure There's an importance there, right? To be able to have those systems in place to say, Hey, your core business is plumbing.

Jack Carr: We want you to grow plumbing. We don't want you school, I call it squirreling out. We don't want you getting over off sidetracked onto these one offs to, to make money. So definitely focusing on financials, understanding your books, maybe potentially having a good bookkeeper manage those books for pretty early on to make sure that everything's accurate and or that you're able to go through and understand it.

Jack Carr: Justin, was there anything for you that you noticed that through your exit that you said, Hey, this was, I'm so glad we did this, or I wish we did that.

Justin - Leap: I think our situation was a little different because we really focused on the end result, which was, we started with the end in mind and that's how we built the I think unfortunately what happens a lot of times with business owners is they get to where something happens and they have to sell now and then they're not going to get a premium for it if they can even get anything for it.

Justin - Leap: And basically they've spent, you see some people 40, 50 years, they've spent building something and really it's a job versus. a business that's a sellable asset. So I think really dial in on what the end result looks like. And even if it's not sell, even if it's, passed down a generation or whatever it looks like, just have that in mind so that you're going towards that goal.

Jack Carr: Yeah. I think that reverberates throughout the entire business too is Intent. Intent is extremely important intent in everything you do, in every system you place. What is the meaning of it and what's the goal by the end? Justin, were you on ServiceTitan already?

Justin - Leap: We were, yeah, we were on service.

Justin - Leap: Gosh, we've been on ServiceTitan almost 10 years between 1.0 and now. . So 1.0. We jumped into ServiceTitan pretty quickly which was obviously nice when we partnered with leap because we had team members that had been in that software, so for so long. So that. That certainly was a helpful

Jack Carr: makes the transition easy.

Jack Carr: I'm sure. Yeah. Was there anything else like that? Either a software tool or a system that you said, Hey, we went residential only and that was the intent because we wanted to build to sell at some point.

Justin - Leap: For us, residential services. C. O. D. And we like C. O. D. We do a little bit of work with some of the boxes, but C.

Justin - Leap: O. D. Work really is the dream. So we didn't really get into commercial because we didn't want to get into the billing part of it. It's not to say that there's not some value in doing commercial work just for us. It wasn't a good, it wasn't a good avenue. It was be able to service as many customers as we could.

Justin - Leap: Throughout the day and be able to get paid throughout the day. Cause again, we were in the scaling mode, so we're trying to grow and scale probably a little faster than we. should have, but that's okay. I'm ambitious.

Jack Carr: Yeah. That's the problem we all have is the cashflow cycle on anything that you try to get a hundred percent year over your growth with becomes a, an absolute nightmare on cashflow.

Jack Carr: And with that, Justin, we're in a unique situation here where we don't get to talk to people who exit a lot. I don't know what you can and can't say, but what, do you have any advice for anybody who's building towards an exit or going towards an exit? What is something they should be thinking about or doing to start prepping for that?

Justin - Leap: I'll mirror what John said about know your numbers. That's really important because knowing your numbers is going to know, it's going to tell you what the business is worth and if it's a viable asset. And again, the other thing is just understand what's important to you, right?

Justin - Leap: Everybody's got non negotiables for everybody. Everybody should have non negotiables on what they want out of a deal or, life or anything. So be thinking about what is important to you if you exit. For us, one of our big things was our team and our core value. Our our culture was very important because they had helped us grow and scale as fast as we did.

Justin - Leap: So as we were talking to potential partners, that was really important to us is we have to make sure our people are, Taking care of and have opportunities moving forward.

Jack Carr: Like we said before that's huge. That's the opposite of the PE Playbook is you want to keep everybody you want to keep everybody happy You want to keep the culture there and we find a lot of times it just doesn't happen with PE no, that's extremely interesting Like I said, we don't get to talk to people who've exited very often and they're usually under pretty strict Ndas and non competes and all that.

Jack Carr: So John you've rolled up a home service company before. Now you're rolling up this other one. What is some of the biggest lessons that you've learned coming out of this withdrawal strategy?

John - Leap: So a couple of thoughts. One of the things that was, I think I don't know if it was a surprise, but it was really interesting to see the owners of businesses in HAC and plumbing are very similar to each other.

John - Leap: The owners that we had dealt with in the security space. And it's always inspiring to me because. Cause these are all entrepreneurs in the true sense of the word started the business, usually out of their garage or their truck built a family business over in some cases, many years, in some cases, generations.

John - Leap: And it, for me, it gave me a profound respect for for the opportunities we have in this country to, to do something. Special like that on your own. And the kind of person that it attracts, right? You don't get someone who is, who's hesitant or tentative or not willing to take a risk, right?

John - Leap: You get folks who are willing to jump out and take a chance.

Jack Carr: I was going to ask about that. How do you manage that? Cause in my mind, there's two types of entrepreneurs. There's entrepreneurs that got into it because they like the game. They like to build for whatever masochistic reason. They just love the pain of not knowing where, whether they're going to make payroll or not, but the other set of owners, um, there's a decent group that I feel went into entrepreneurship because they don't like being told what to do.

Jack Carr: They don't like having a boss. Yeah. How do you manage across those two or do you just avoid one group or the other?

John - Leap: Yeah, so I, I love working with folks that have that approach, that have the confidence. And and the drive to want to do things on their own. You can take that too far.

John - Leap: If you get to the point where you have the attitude that I know everything and I, and no one has anything they can teach me, then that's taken that too far. And that person is obviously not a good fit for us. Cause we learn from each other, but I really want folks with that kind of drive. That want to build it themselves, but are so committed to that, that they want to learn everything they can from anybody.

John - Leap: I don't want someone who's good at taking orders are good at doing what they're told. That's not, that is not a good leader of an organization. It's way better to have folks who, who have that kind of mentality. And But yet understand that to do that really well, you've got to learn from everybody.

John - Leap: And if you have that approach as Justin does, and everybody that we brought on to our team it's really magic when you get them together. We had, as you mentioned, the group together, we call it leadership meeting just just a week ago and seeing all these guys in the room who are entrepreneurs, built their businesses, did it on their own, carry the load by themselves for many years.

John - Leap: Who are now in a room, just inspired to help each other and learn from each other. And asking lots of questions and taking lots of notes and diving into to engagement that we're doing and team exercises that's where the real magic happens. But it doesn't happen if you get a bunch of guys who just are ready to do what you tell them to do.

John - Leap: It's gotta be guys and gals that. That are self starters that are very motivated and that and that wanna do it on their own.

Jack Carr: Yeah. You guys facilitate, which I found really funny with everyone I talked to at the leadership meeting everyone had a healthy sense of competition against each other, internal competition, whether it was golf or numbers or sit like the golf simulator, whatever, every single one of them at all times is talking about.

Jack Carr: competing and winning and, but all in a very, in jest, they were having a great time. And so I think that's a huge piece to the puzzle is as the leadership team as leaping kind of the leadership overarching team creating that culture among the owners to be able to compete healthily against each other, which I mean, for Any of the owners listening, we talk about creating that same kind of culture and competition for our internal teams, right?

Jack Carr: We want all of our HVAC guys competing for the highest ticket and the most flips and et cetera, et cetera. I think it is an interesting breakthrough for me seeing that was going, Oh, it's the same. It's the same thing. You're just doing it to us. Awesome guys, I really appreciate you guys coming on today again, John, where can people find out more about lead partners, maybe touch base with you?

Jack Carr: What's the best platform.

John - Leap: Yeah. Easy way to do it is through our website, the lead partners. com. Of course, anybody can reach out to me. My phone number's on the website. I love engaging with business owners. Even I enjoy even talking to owners that are not necessarily ready to sell, but just have questions about it.

John - Leap: It's a great way to make friends and learn new stuff. I love the opportunity to chat with anybody that I have. The opportunity to learn a little bit from and help out in any way that I can. And I'm really appreciate you doing this, Jack. It's been great to get to know you. It was obvious from the start you had to, before you even began that you had the you had the energy and the drive and the creativity to make something special happen and it's been fun watching the success you've built.

Jack Carr: I appreciate it. I think the word that you were looking for is that masochistic again, that one trait just enjoy the pain. But yeah we appreciate you having you on and thank you, Justin, for coming on and sharing your side. It's been wonderful. For those of you at home, if you've liked what you heard today, go ahead and leave us five stars on wherever you listen comments, questions, anything like that, where you can get you in touch and thank you all appreciate it.

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