Here is a bit about me and my search. Bio: Southern state school, MBB consulting, big NY PE, left to search, no stranger to SMB - grew up in a family restaurant. Search: Texas-based B2B business (mfg, services, distribution, tech) w/ $1M+ cash flows. DMs always open.

Update: prices should go into effect around September, not July. Beware when you read headlines that tout "no inflation from tariffs" - we haven't even gotten through through the retailers yet.

This magic is why we keep consolidating - every deal looks like a good deal. Then, we put in the work and earn the economics by function-by-function integration. This is why quality platforms are worth as much as they are. /end.

These two points are connected - we can only reliably realize significant synergies BECAUSE we put in the effort to integrate the business fully. And, that is how we can buy an add-on at 11x with no new equity. /7.

Within the first 12 months, we will fully integrate the business - every function gets replaced with our platform's way of working. Including the ERP. We have it down to a science. And we will demonstrate that the synergies have been captured with a run-rate P&L. /6.

Our lender will fund up to 5.5-6x pro forma EBITDA - even though we won't have the synergies realized yet, we can borrow as if we did. This doesn't work everywhere. But, we have a track record. So, our lender is willing to fund the deal. /5.

With the superpower of the platform allowing us to realize significant synergies reliably, we're buying EBITDA for 6x rather than 11x. But, it gets better. /4.

The first math I do is on synergies - which in the case of this platform are unambiguous cost savings we can model and realize reliably. I can remove $3.5M of costs, so $4M of EBITDA would contribute to us at $7.5M of profit. /3.

We are evaluating an add-on in our industry earning $4M EBITDA. The guided price is around $45M, or ~11x EBITDA. Now, I am a former searcher. So, 11x is an absurd price for a $4M founder-run and founder-owned business. Or is it?. /2.

Here is how roll-ups buy businesses for what may appear to be very high multiples. with a real example from the PE-backed platform/roll-up I do M&A for. /1.

I work at a PE portco and we have an incentive mismatch between our mgmt units and the carry pool. We're incented on MOI. We may have an opportunity to generate a high IRR on new equity, but it would blend down our MOI. Do we address it or quietly pass?.

Update: our price increases have been sent out to our retailer customers with a target effective date of mid July an a price impact for the consumer around 9%. Let's see how retailers respond.

In the next 2 weeks, we'll announce the price increases, get a clearer view on the likelihood the alternate supplier actually delivers, and complete a marketing spend freeze. Thanks for reading. /end.

In reality, the hair of extra price softens some of our (substantially) reduced profits this year. Taking that extra bit of price softens the impact of selling fewer units and probably still going OOS on the tail of SKUs for most of the yr. /6.

What that means for price: we don't need to take low teens price increases. A MSD% covers the cost increase. We will likely take a HSD% increase - which, theoretically, would mean we'd make more on each unit than in the past. We're covering out cost per unit increase and then.

The economics are much better than tariffs. Indexed to 100, China's post-tariff price was 245 (100 + 145 tariffs). This alternate supplier is something like 130-140 which is a mix of tariffs and mfg cost deltas - mostly the latter). /4.

Turns out, we can move faster than we thought through a combination of . a) us gty'ing large volumes to a new supplier (risky. ). b) the China supplier providing partial inputs to the alternate supplier. /3.

The #1 thing that happened was that we qualified an alternate Asian supplier up to much larger volumes more quickly than we expected. In my prior thread, we hoped we could move to this alternate supplier, but didn't know how fast. /2.

It's been two weeks - which is a lifetime under these circumstances. Some pretty big changes. Here's what has happened. /1.

It's fast to change the tariff number at the ports. It's also fast to change our prices. It's slow to reconstruct our supply chain. So, give us time and certainty - and we'll get it done. But, if you take the easy route, the "adjustment" period won't be pretty. /end.

It's all a bit chaotic and unthoughtful. We cannot execute on the behavior tariffs were created to encourage (re-shoring or friendshoring) fast enough to make a dent in this year's P&L. Instead, we're resorting to price. /10.