Hi everyone -In case you arrived late, if you have questions please post them in the chat. As we work our way through the prepared questions, I'll help moderate any of your Q&A

Ya'll are quiet. Don't be afraid to start throwing out questions...…..

If not already mentioned already, can we talk about valuation expectations in the near term for both sellers and investors

When we do start reaching back out to owners with cold emails, what type of messaging resonated best with sellers? Especially when not trying to come off as a shark in bloody waters.

Any advice on communicating and managing seller expectations on later stage deals that have been put on hold due to the macro environment / financing environment? How do you maintain those relationships?

Lucas/Ryan - I'm curious if you had to make any terms changes as you transitioned from debt/equity mix to equity only. How did investors respond?

Question for Jay and Jason - Did you already have an M&A pipeline/strategy going into the deal, or did that strategy develop post-acquisition ?

Just to expand on Nate’s question: we’ve spoken a bit already about the lag in multiple discounting in private businesses vs public, however can you talk more about the EBITDA basis on which valuations are done. Are LTM financials still relevant or should we now move to doing some valuations based on forecasts?

Are you aware of any aspects of the CARES Act that could benefit searchers as it relates to conservation of search capital (e.g. wage/rent subsidization through SBA loan, unemployment benefits, etc.)?

What do you think of raising additional working capital for a deal to increase margin of safety during this period, especially if there's investor appetite?

If private market sellers don’t adjust prices down as quickly, does the opportunity to buy at a lower multiple actually exist?

Love the idea of becoming an expert on SBA 7a program as an excuse to follow up with sellers. "Hi CEO, Following up to the email I sent a month or so back. While I know now probably isn't the best time to talk about potentially selling your business I have been doing some research on the 7a program and could relay what I've learned. Otherwise I'll plan to just follow up in a few months..."

What is your advise for searchers in their final 6-10 months of search? Should we also consider raising additional capital from our investors?

To answer Danny's question - we did not have a consolidation thesis going into our deal. It formed over a period of time. Took us 2 years to do our first tuck in, probably 4.5 years before we really stepped on the gas pedal with regards to M&A.

For someone with a deal in diligence or under LOI, how much balance should be given between getting the deal done and continuing outreach. Especially given the potential for liquidity to change the capital/debt market.

Thanks, Jason very helpful

Schatz - I would definitely consider that. Cash is king, queen, jack, and jester. It's expensive, but you're right to reconsider how much working capital you'll need and make sure you don't put yourself in a position where you're banking on raising additional capital to fund operations. As Coley mentioned, liquidity is currently still there in a way that it wasn't in 2009. But that could change.

Any different or additional recommendations you all would have for searchers outside of the US?

if liquidity remains as available and willing as it has been, what is going to bring the multiples down?

To answer Andrew - it is always to the case that you should continue sourcing as much as possible when you are under LOI. That is especially true in the current environment. Broken deal % will go up. So keep sourcing. It's hard, but must be done in my opinion. GOOD DECISIONS COME FROM GOOD OPTIONS.

How do we differentiate between businesses facing short-term stress and a downward spiral?

Dan, I would expect earnings and earnings growth to slow

Availability of debt in general is relatively correlated with multiple contraction as far as I understand it

If you have a deal approaching LOI, is it better to hold off? I'm concerned about the logistics around initiating a due diligence. In a practical sense, neither me nor professional services can travel to visit a business/owner in order to actually perform the diligence.Additionally, if you are working on LOIs based on financials from 12/31/2019, does it make sense just to stall deals until you see how they play out over the next few months?

Great question Vik

Don't think my sound is working

Can you smell desperation from sellers also

Not just numbers

Is anyone in the investor community open to funding distressed opps right now - obviously thinking more about busted cap structure scenarios where the businesses are fundamentally solid

We've talked about the importance of search runway. We've also noted that some industries (e.g., software) will be less affected. For industry-focused searches in recession-resilient industries, do you think it's as important to maximize runway as it is in other searches? Or do you think the deal pace in the recession-resilient industries will only slow down moderately, if at all?

Coley or Others - Can you share a couple examples of businesses that have been surprising in how they have not been resilient? Either related to this crisis or other macros issues

Probably not going on a cruise but

totally agree Tony...

I was going to make the joke Tony, but feel like I used of my quota with the beer

lol

Neil - WHY ARE YOU NOT SOCIAL DISTANCING?!?! Go home.

Ryan, it is called a virtual background, a tech feature of Zoom.

Isaac - A couple examples: a B2B contractual recurring revenue logistics business, but, it’s end customer base is 55% retail and totally shut-down. Dental businesses are totally shut-down as well (consumer so no surprise, but this was an unexpected risk for the dental thesis…ie total economic shut-down). Alarm monitoring businesses you would also think are super durable, and they can be, but again if the end customer base can’t pay, then they won’t pay and cash gets tight fast given the use of leverage to grow those businesses. Hope that helps.

Thanks Coley!

Any different recomemndations for international searchers?

*recommendations

Get ready to eat that glass!

Ryan, thanks - I was thinking about what to make for dinner... glass.

What’s your battle armor, Ryan?

I'll start helping when I wipe the tears out of my eyes!

SO GOOD!

Thank you - great session!

THANK YOU!!!!!!!!

Thanks to all the operators, investors and panelists, this was great!

hell yeah do it again

Thank you all!

YES

Yes! Thank you guys. Awesome stuff.

YES - super helpful!!!!!

Definitely more

Yes

Yea

Very helpful, thank you!

Thanks everyone! Would love a follow up

Thanks. This was awesome

would love a follow session. this was great. thanks!!

Thanks everyone, really useful.

Definitely

Yes

yes please

Yes very helpful

Yes

Very useful!

Yes!

Fantastic! Thank you!

This has been very helpful, yes I'd definitely like to see a follow up

Yes

When’s the next one??

yes

Yes

yes!

Yes

Si

Thank you all!

Hell yeah

ya

Yes, please

yes absolutely—this has been great!

Yes

Super helpful

thanks all

This was great!

thank you for organizing!

Definitely!

Ryan, two bourbons before the next pep talk!!!

Yes. We appreciate the leadership here. Thanks for making the time. Please keep it up.

Yes please! : )

Thank you GJ and Will! We appreciate you putting this together. You guys are the best.

thank you, this was very helpful

Thanks you all!