Profitable businesses with 50 to 100 employees are winding down because there is no succession plan.

[04:53]

"You have super profitable, multi-million dollar businesses with 50 to 100 employees and, because there's no succession plan, these employ. So, yeah, the, the owner is retiring, there's no succession plan, so what they're doing is they're winding down their business, which means like 50 to 100 people could just be unemployed, just like that."

[03:04]

"You know, their parents grew up in the trades and they always told their kids: you know, do better than us, right, be a doctor, be a lawyer, do something better than being in the trades."

[07:53]

"So the first one we bought was an eight million dollar, 8.6 Million Dollar business doing about 2 million in ebitda right and um, just by applying some of the management structure and efficiencies, we're bringing that year to date a 2.5 million ebitda."

Full transcript

Welcome, ladies and gentlemen, to the family office Club podcast and YouTube channel. Uh, we're gonna get right into it. I'm gonna introduce a very special member to the family office club, uh, renan Cortez, the founder of Syndicate Venture group renowned. Cortez is a 12-year military veteran, over 27 years of combined experience. Uh, Syndicate Venture group has over 8 million dollars in assets on their management and renon is focused on investing in underrepresented Founders by stimulating the local economy and expanding the community Workforce and developing a portfolio of profitable service based companies.

So I know that very well. I've been kind of uh, I've known you for over a year now. Our team has definitely been, has helped you with a lot of The Branding here, has has seen your growth. But can you tell us more what that means and can you tell us more about? Uh, what Syndicate Venture group is now?

I know you can start by saying hi to our audience too. Yeah, Andres, thank you for having me here. This is amazing. You know. I feel very fortunate to have some time to speak with you and and your, your group here, family office, uh, Club, um, and you're right, any family office buff has done wonders for me in in the progress of what we've done.

Good, I remember day one. I was very happy. Well, you, you remember me from day one. Uh, you know, very uh wet behind the ears but yeah it's, things have come a long way, um, well, I'm to add on to that. I mean, we were really excited to come across you, you know, and your vision and what you were doing, and we saw, at least we thought it was very attractive.

So I remember when Richard reached out to me and he was like: Hey, I want you to talk to renan. He seems to have a really good head on his shoulders. I like his attitude, I like his values and what he is doing makes a lot of sense. So, no, we were just as excited to work with you.

Yeah, this whole thing, it, it just, it just makes sense on what we're doing, right. So I did 12 Years in the military and then I did 15 years Corporate America, medical device sales, selling pacemakers right for top companies like Medtronic and Abbott, and I did some medical startups as well, and, um, I switched gears right at the age of 46, 47 years old, right, and uh, bought my first company. It was a construction company: water restoration, Property Restoration and mitigation that's. You know, it's kind of like when you have a flood, fire, smoke, mold kind of problem in the house, and what I found are these service-based businesses are very profitable and they're not always run as efficient as they can be.

And there is a thing called the silver tsunami happening right now where the you know, they, they say the boomer generation. Right, they're exiting their businesses, you know. So the boomer generation started a lot of businesses or they took it over from their, their parents, they cultivated it over the next 30 years, and now there's a a generation that's retiring. They're over retirement age and there's no succession planning.

Their kids want to be Tick-Tock Stars, IG, famous, right, they want to get into crypto, Ai and that's all cool stuff. It really is, you know. Or? You know, their parents grew up in the trades and they always told their kids: you know, do better than us, right, be a doctor, be a lawyer, do something better than being in the trades.

So there's an actual big issue, a problem especially with our infrastructure, the way it is in the country, where service based businesses. You know there isn't a good succession plan for it. So that's basically what we're doing. We're doing a national roll-up of service-based businesses, specifically construction, uh, restoration and reconstruction companies, and there's a huge opportunity for that.

And then, yes, there is a philanthropic mission for us where we are helping underserved populations. You know, uh, military events transitioning from the military to civilian, uh life. You know we're offering mentorship, development, uh, women entrepreneurs and and other underrepresented business Founders. For sure, excellent and um, definitely the the Blue Wave is definitely something that that I've read up on a good amount.

But I'm very curious in terms of what your experience has been with these baby boomers, with these entrepreneurs and business owners in that generation. You know you made a really good point. You know all of their kids want to be Tick Tock Stars. You know their grandkids. Um, the secession plan isn't. Isn't there because of this new generation?

And you know, uh, how lucrative it could potentially be to be a tick tock star nowadays. You know there's a seven-year-old making millions of dollars for their parents by playing with toys in front of of a TV fire truck. You know it's crazy, it's really is. Um, but tell me, you know what are? I don't really talk to a lot of these Baby Boomers and service based businesses.

How serious is that problem? What kind of stories are you hearing of? Oh, there's people that they're gonna do with their business. Yeah, they're struggling to sell their business, believe it or not. You have super profitable, multi-million dollar businesses with 50 to 100 employees and, because there's no succession plan, these employ. So, yeah, the, the owner is retiring, there's no succession plan, so what they're doing is they're winding down their business, which means like 50 to 100 people could just be unemployed, just like that.

You know they tell them we're closing business, you have to go find another job, and so that's a problem we're solving right there. Because we go in. We, we acquire the business and then, because we're adding it to the, to the portfolio, we're actually increasing the staff. We're trying to actually grow the company instead of where it's been kind of spiraling down, maybe year over year.

You know people get tired, they don't want to add marketing, they don't want to push as hard as they did where they were in their 30s or 40s, right. So they're just kind of winding down. Um, so we kind of freshen up the business. And it's the old adage, right, they say: you find a company that's operating on a fax machine, replace that with a computer and profits go up by 30, let's say, right.

So that's what we're doing. We're implementing management structure, organizational efficiencies, technology policies, automations, all the things you would find in a larger corporate um company. And we're applying that to service-based businesses and we're we're seeing some really good results. And what examples of service-based businesses you know. Maybe share a story with us about one particular company. Yeah, so there's HVAC, Plumbing, you know anything, infrastructure, right?

Uh, so, and this is what I, how, I kind of developed the thesis. You know we've been. You know coronavirus is going through and you know gas prices are going up. If gas is 20 a gallon, right, people are like delaying their vacations. You know they might not buy that addition for their house. You know there's things, luxury items, that they don't need.

But if a pipe breaks in your ceiling and you know it's coming down to your living room, to your basement, you're gonna make that phone call, right. And so are you going to call insurance. Insurance is going to call a company day like mine where we come in and do the work, so it's. It's kind of a necessity, right.

So it's, nothing is Recession Proof, but there is definite recession resistant companies, and so that's the service-based businesses that I'm I'm speaking of. Um, you know, like in Arizona, super hot, your age track goes out, your AC goes out, you're making that phone call. Yeah, you're gonna put it on a credit card or something or have insurance cover it and you're going to make the phone call. That's not something that you could really DeLay, So it's a necessity, and that's where I'm finding the most opportunity.

For sure got it excellent and have there been any um kind of like recent acquisitions or Acquisitions ever since the start that really that you're probably maybe very excited about? Maybe you can share a little bit about how you found that family or that you know that business owner, yeah. So so we do a pretty strong off-market deal sourcing campaign where we talk to the owners off of the uh, off the biz, Buy, sell, listings and loopnet and all the traditional ways, because I find that they're stronger, the stronger businesses, uh, Stronger deals that you could grade, more more authentic relationships. So the first one we bought was an eight million dollar, 8.6 Million Dollar business doing about 2 million in ebitda right and um, just by applying some of the management structure and efficiencies, we're bringing that year to date a 2.5 million ebitda.

We're tracking. We have 30 more million assets under management coming on board: one in California, one in Pennsylvania. I'm based out of central New Jersey, so you know we have by Coastal. Now there's an asset in Seattle we're looking at and so now deal flow is getting really strong. You know, I'm getting into the network, I'm, I'm, yeah, it's just it's becoming really fun uh finding these assets, speaking with the owners, uh, negotiating the terms and implementing into the portfolio.

And so I decided the very first one. To be honest, I did it for 100 solar financing. So I bought an 8.6 Million Dollar business with no money down. Uh, no money down, no banknote, um other financed. And so when I did that, that's actually what led me here, I'm like, if I could do that without money, imagine what I could do if I had Capital.

You know my negotiating power would be higher. You know I could negotiate a better deal. You know, because I gave them a little bit higher of a multiple do the seller financing, which you know, that that's what's in it for them right. But now we're raising 100 billion dollars for our fund and that's for the express purpose of acquiring businesses, capitalizing into them and growing to 100 million in aggregate ebitda.

Uh, we expect one to one point five billion dollar exit in five to seven years, and then we'll see where we go from there, you know. But right now the vision is clear and and we're marching forward. It's, it's exciting and when you talk to some of these, um, these business owners in that boomer generation, are you finding it? It's a lot like you know, for example, when, when I was wholesaling single family properties, a lot, the, the best properties you know, they were getting called like crazy.

You know, are you finding that? It's um, highly competitive? There's a lot of people calling these Boomers trying to buy their businesses. Yes, even the seller financing, since it's a creative structure that exists. Are you finding that? You know they're telling you, for now on, this is my have called today.

This is my 10th call this week, you know, and is it like that? Or or are you getting? A lot of people are like, thank you so much. I've been dying to speak with someone to take this business off my hand. No, so you know, the larger, the, the sector I'm looking at now, one to six million in Evita, they are getting a lot of calls from private Equity now, because at the higher levels the bigger.

You know, because this that's considered the lower Middle Market, right, where the typical private Equity lives and they play. It's starting to get very, very competitive for them. So now they're starting to come down to the one to six million ebit to Mark, right to the lower Middle Market. But where we have the edge is, you know, we actually have, um, I want to say we're more personable with the owners, because the thing that I do hear from them is, you know, you have somebody behind an Excel spreadsheet in their office and wherever right, just kind of making an offer based on numbers.

Um, we make it a point to actually meet the owners in person. We established a relationship and we see if we're a good fit to begin with, right, because it's not all about dollars and cents. We have to make sure there's a culture fit. We have to make sure that we take care of the employees there. There's a bigger picture to all of this and so, to be perfectly honest, I mean that that's we've gotten the edge over bigger private Equity because of that, uh, like the one in California: 18 million dollars, you know, they actually had an offer in hand for 24 million, but they, they see our vision, they see our mission and they opted to go with us, to come into the bigger portfolio for the bigger picture down the line.

So I, I feel we have something special going on with Scenic adventure group for sure, awesome, incredible and in terms of um, what led you here? Um, you spoke a little bit about I'm not sure if maybe the Property Restoration and being, you know, kind of involved in in that space, kind of you know, is what gave you so much background on, on some of these more traditional based businesses. But what kind of LED you to this thesis and saying: you know what, I'm going to launch this fund and I'm going to build this, really this investment platform, right, yeah, no, so it's been a wild Journey over the last two or three years. It started with, you know, being in a mastermind with Cody Sanchez and understanding how to buy a business, and then, from that it led me to acquiring my first business, which led me into getting into a group called go abundance, which is a another type Mastermind Network, and that's where I met Richard C Wilson.

He was a keynote speaker and, um, everybody is very real estate Centric in that group, so they were talking about real estate syndications and um, and speaking with Richard, I just wanted to pick his brain and say, hey, look, what do you think about this? So let me rewind a little bit more. When I was with Cody Sanchez going to her Mastermind, I realized that this is almost like a micro PE type environment that I'm in. You know, it's not true.

You know like billion dollar PE, but 100 million dollars is considered micro P. So I enrolled in Columbia business school for private Equity Venture Capital because if I want to do this, I want to learn from the best, I want to hear it from the authority on this stuff and while I was there, it just kind of just made sense. This is the whole Berkshire Hathaway model, right, buying a strong, cash flowing business and hold it into perpetuity. Except, I have an exit in mind, right, and the exit might be in the form of an IPO, because these are going to be really strong cash flowing assets at the end of the day.

I mean, when you're talking about 100 million in ebitda aggregate at the end of five years, minus Debt Service, we're still clearing about 30, 40 million across the portfolio. And then, uh, you know that that's, that's exciting money right there. Right, there's a lot of good, a lot of philanthropy we could do with that money. And then the investors on the other side, you know they're gonna have great returns.

So I I built a really strong thesis on all facets where it's going to do a lot of good for a lot of people. And, like I said, I vetted it out at Columbia with professors there, with other private Equity, GPS and, uh, you know some of them, they, they're, they're into the AI or the fintech, health Tech, you know, because they want that 50x, that 100x and I get that right. But the way I see it, I mean base hits, doubles, triples, consistent cash flow. Every now and then we hit a grand slam.

That's fine also and that that's pretty much, along with, uh, what our thesis is going. You know, strong returns, consistent returns, with very low volatility and risk, uh, yeah, no, that's incredible. You've really like hit it from all sides and I can just tell just by looking at your history and your in your career history, you're really well set up to, you are a thought leader in this space. You know, this is like 27 years in the making, right, exactly.

You know, yeah, from our military experience and you know, I think with military experience, I think comes a lot of blue collar experience right, like blue dollar. You know, you understand the blue collar culture at such a deeper level because 12 years right, with a lot of people that are blue collar, right, a lot of blue-collar Americans, medical, uh, startups, so having that experience in the startup world, right, um, and then also obviously the Property Restoration side of it. And now this, uh, you know, going to Columbia business where there's so much right, it's like wow, yeah, I mean, I use my Gmail offer. Yeah, I use my GI Bill to get my MBA.

Um, I was fortunate to be in Fortune 100 companies like Medtronic and then Abbott, right, so I was a sales coach. I got really polished within Corporate America. So, yeah, you're right, I mean, I I went from sleeping on in the rain, in the dirt and the mud, pulling you know guard Duty and stuff, to then Corporate America and seeing that side of the table and then kind of putting all the assets together and and building something for ourselves, right, and yeah, yeah, it was a really wide perspective. But, in regards of being a continual learner and everything you've learned, what do you think is you know, especially this past year, this year, 2023?

You know we're in Q3 coming up on Keith Brewer here, you know, uh, fall just started. What yesterday, the day before? Um, so what you know these nine months, 10 months now, going on 10 months, what? What has been your biggest takeaway this year in Life or in life? Yeah, life in the business, you, business? Oh.

So I mean, give me both, give me business, analyze the biggest thing. To be honest, it's it's, this is the big thing for me and this is what I try to tell everybody when they see what I'm doing and they say how are you doing it? Or you know, how do I do that you really have to take action. You have to put yourself in the room.

You have to take a chance on yourself and believe in yourself. So all that is to say: I have, you know, you have friends that say, man, I really want to do this. Well, take a step, take action and do that. It's not going to happen by sitting on the couch or grabbing, you know, being at the bar Friday night just thinking about it.

You have to take a step, find who you want to be like. Be, get into that room, ask questions, right, that's family office Club, prime example. You, you know I'm very, you know I didn't know much about private Equity when I first started this whole thing. I know I went to Colombia and I did all this right, like getting into the environment, seeing how it really is, speaking to real life, uh, GPS and managing partners and all that.

It's really grown my brain exponentially. So, be in the room, identify what you want to do, get into that room and ask tons of questions and take action. That's been my mantra for, yeah, for the last couple years. To be honest, that's yeah, that's amazing and and makes a lot of sense. You know, and I think a lot of it is what you mentioned: work ethic, I think.

You know, I, I hear it and I'm like huh, like Columbia business school. You know, making income. How many children do you have? Oh, that was about to save. So I was five kids, you know. Two of them are in college.

Um, you know, I had my full-time W-2, which was very demanding Corporate America job. You know I was training Jiu Jitsu three or four times a week because that's like my. I've been training that for 17 years at a high level. So I, I just love that's my outlet right there. So I love that, um, way of socializing with people, all right.

So Jiu Jitsu, uh, doing the masterminds, getting the NBA, Colombia at night, it's, it's, it's tough, It's Not Easy, right, but you know that's the whole thing. It's not supposed to be easy because if it was, everybody would do it right, everyone would do it. Yeah, for sure, for sure. 100, I think. Um, that's thing, and everybody wants it to be easy.

And you have a lot of people out there too, that if it's not easy, they feel like they'll blame it on the markets, they'll blame it on the economy, they'll blame it on the system, they'll blame it on the event they go to right, um, but it's, you know it's not supposed to be easy, um, but then you know you being once again so well-rounded, uh, so so much worldly knowledge. Honestly, the the question is: this year, what was that thing that you learned? Maybe you can put, you know, maybe it's just been continual learning and building on what you already know, but maybe there was an epiphany you had this year, in the past 12 months, that you were like, after all my experience in the military, in the medical field, in Property Restoration, Columbia University, Jiu Jitsu, where you know that makes you such a wise person as well, right, martial arts. But maybe there was that one thing this year that you were like, wow, I never saw it that way gave me a brand new perspective.

You know, sometimes when we are so intelligent, so smart and we've learned from so many people, it can be hard to teach us very new things we've never heard of. We can build on what we know, you know, but maybe there was like something that really this year was like I never saw it that way and it changed everything. The biggest thing for me, honestly, was confidence in myself and my team. Um, I was scared, scared, scared.

Like two o'clock in the morning, hands in my head, scared, because, yeah, I worked in corporate, I've had teams, but you know, if you know something were to happen, we still have that company. Right now, I'm kind of leading everything and decisions that I make or my teammates. It affects, you know, families. Like I just said, you have these companies that have 50 to 100 people, employees.

You make a decision in that company that affects more than just your family, it's everybody. So I had to get like, really strong confidence in myself. Right, I had to get very introspective and and surround myself with, uh, networks of people, uh, to hedge our, our success, meaning I don't want to fail and we are not going to fail. And so what am I doing to ensure success, since I'm surrounding myself with people smarter than myself?

Right, that could ensure our success because, yeah, we needed to have this. Uh, yeah, this was an interesting question. I actually just got very introspective on this for real, but that was the biggest thing for me because it was like one of the scariest things ever, and I've done a lot of cool things along the way, but I this has been a transformational period in confidence and knowing that I have a Clear Vision now to like a billion dollars. I know what's going to happen.

I'm very confident about it. I'm building the team. I mean, when we met, it was just me. Now we have a CEO, an investment officer, compliant CFO, director of strategy, all ready to rock and um. It gives me butterflies when I talk about it because I see the vision very clearly. I know we're marching in that direction and it was just a confidence in what you're doing and believing in yourself and doing it.

Yeah, yeah, that's, that's powerful. Yeah, I did, I've had. Yeah, I wasn't ready for that question, but that's exactly how I feel right now. The biggest thing for this last year is is building that confidence and belief for sure. Yeah, no, that's, yeah, it's powerful, so especially powerful for it to be, you know, confidence coming from someone like you, right, and it just you know.

Uh, like I said, you've learned from so many people. Obviously the 17 years in Jiu Jitsu, right, I mean, you learn so much there, right, you're, you're, you're working the max with. You know a lot of the people that I know that have been so dedicated to jiu jitsu. I met a lot of millionaires and multi-millionaires that are super into Jiu Jitsu, so I can only imagine sharing the mat with them and talking and that you know Brotherhood.

You learn so much from that. All the courses you're going to Colombia, it's like, huh, what can someone at this level learn? That's new right? So many times we're just building on what we already know and trying to master those things that we already know. But sometimes it can be hard to let new things in. But the confidence answer was almost one, two thousand, expecting um.

But of course it's just Newfound challenges and a new level of challenge that brings a new level of fear. That is a new level we need to overcome, right? So one thing, one big thing that I learned from Jiu Jitsu over the 17 years is how to fail, believe it or not, because you're not going to win every match. You're going to get tapped, you're going to get submitted.

So it's how to fail and how do you recover from that? How do you get better from that? You know, sometimes you're in a position where you just can't win right. Hicks and Gracie, you know he has that great quote, sometimes you're in a position where you just can't win. It's what you do do in that dark moment that defines who you are right.

So if you're in Back to the wall, you know things are not going your way, do you fold, do you just quit, or do you find a way to, to recover from that and and get better, right and and not make that mistake again? So that's something, it's just, it's just kind. Every time I train, it's like constant failure. Right now, don't, don't get it, I have more success now than failure, right.

But you know, I'm not like the best in the world. So every now and then I run across somebody that just you know they're the hammering on the nail for the night. So, yeah, no, absolutely, that's, that's powerful. Um, wow, once again, you know, no matter, there's sometimes there's just positions in that you can't, just can't win right there.

I'll send you that quote it. I, I didn't do it justice. We did repeat it for our audience. Oh man, you know, I would have to pull it up and really, yeah, because I, I just that's okay, you can always. Anyone can always rewind, can always rewind very powerful. I was just talking to to another military veteran.

He gave me a great quote too. He said: no door is closed, go go through them. Yeah, that's a good one, that's right, no door is ever closed. Just go through that, like, okay, so good stuff and good nuggets, and uh, we're gonna wrap up with that. That was. I think that's a powerful way to conclude.

We'll wrap up with asking, or not, I think, about anybody watching this would probably love to reach out and talk to you and get thoughts, perspective, or reach out to you, because they're very interested in seeing how they can participate and it's in the convention group. So how can people connect with you, or not? Sure, our website is www.svgte.com. That's cynicadventure group private equity.com.

Or you can email me, renon r-e-n-a-n. At svgpe.com. Excellent, fantastic. Uh. Well, renan, we'll see you. Uh, you're gonna be with us um Monday.

Yes, I'm in New York on Monday and then I'm definitely going to the Super Bowl in December in Fort Lauderdale, nice. Yeah, yeah, the family office Club super Summit in December that we do every year. Uh, October 3rd 2023, um, next Monday, you'll be with us in York for our private investment Mastermind. From December 5th to the 7th 2023, you'll be with us for our super Summit.

So I'm excited to have you there, excited to keep sharing space with you at these events and and watching your growth here, that's in the convention group. So thanks so much for being with us today, thank you, thank you,