Ep 96 - Jesse Jackson | The Truth About Selling Your Shop to Private Equity

0:00But that gap on the table, that 9 or 10x between what private equity is getting and between what the shop owner is getting, is literally like the difference between a shop owner being able to retire, live their life how they want to live it, versus eking out a retirement and worrying about whether they take Social Security at 62 or 65 and how long they can make it.

0:23The following program features a bunch of doofuses talking about the automotive aftermarket, the stuff we or our guests might sell. Say, do not necessarily reflect the beliefs of our peers, our sponsors, or any other associations we may have. There may be some spicy language in this show, so if you get your feelings hurt easily, you should probably just move along. So without further ado, here's your host, Mike Allen, with Confessions of a Shop Owner, presented by TechMetric, the best software in the history of ever.

0:57So the throne story is, uh, I was at a Continental Ride and Drive event in Uvalde, Texas. I got there a day early and it's right on a little downtown river area. And across the street from the hotel was this commercial building that had a rooftop bar. It's a beautiful day. So I was gonna go to the rooftop bar and have a drink or two.

1:21And I got there and it was dead. It was me and one other dude who was also there for the same event. And just chatting it up and people started to filter in and took about an hour for us to realize that we were in a drag bar. And they were about to have their event for the week on that night. And so that throne that's in the logo was the master of ceremonies throne during the drag show.

1:45Yes. And so I was like, well, I got to get a picture on the throne before the show starts, right? So he took a picture of me in the throne. And that was 3 years ago before this was ever born. So I didn't know that I was creating the logo for a podcast until much later. That's awesome. You heard it here first.

2:04I love a good drag bar. Yeah. Yeah. Whatever. We haven't really met. I've seen you around, so I'd love to hear a bit about you. Oh gosh. So third generation in the industry. My grandfather opened his business in 1937 and the house was attached to the back of the business. It was a general store with like the potbelly stove and the grocery store and all the old men in the neighborhood.

2:34They were old men for me because by the time I came along, you know, they had been there for 50+ years. It was the feedlot, it was the auto repair facility for the community. It was in a little community called White Cross, North Carolina. Oh my gosh. Yes. And so my dad grew up there and he had no interest in the family business and he went away to college.

2:56College didn't work out for him because he got married and had kids and needed to support family. And he ended up getting pulled back into the industry. But he didn't work for his dad for long. He ended up going to work for another gentleman who had a few stores in a town nearby Chapel Hill. And he ended up buying one of the stores from that gentleman.

3:16And I grew up in dad's store. You know, as a little kid, I was in my grandfather's store because we lived in a single-wide trailer next to my grandfather's store, right? And so I would get off the bus and and go into my grandfather's store and hang out. But when I was old enough to start busting tires and changing oil and taking out the trash, I went to dad's store.

3:36And I hated it and didn't wanna be in the business. So I went away to college and— Repeating the sins of your forefathers. I know. And college was not for me. And the party was totally for me. And mom and dad paid for the first year of college. And then I worked multiple jobs to go to college for 4 more years. So that I could keep the party going.

3:57And I'm still a first semester junior to this day. So higher education and my priorities did not exactly meet up super well. So eventually in 2001, I came back to death. What did you study for 5 years? Motorcycles, whiskey, marijuana, women, skiing. Okay. I think when I finally dropped out, I was— so Appalachian State has a good teaching school. So I was flirting with teaching by the time I finally dropped out.

4:30Teaching what? I had prerequisites. In my mind, I was going to be a US history teacher, because I love US history. But I have zero concept of what it actually means to be a teacher. Other than that, I'm not sure I could do it now. Seeing kids these days. Kids these days, the amount of patience involved has got to be astronomical. And the adverse— Do you have kids?

4:56Yeah, I've got 3. Oh, yeah. 15, 13, and 11. But the adversarial relationship that I've seen between teachers and parents is frightening to me, because I feel like we should be alongside the teachers to help build functional members of society from our children. And so often, they're like, "Oh, my little Johnny's perfect. He never does anything wrong. You're just not a good teacher."

5:24And I feel a little bit like that's an— it's a thankless job, it seems like. In North Carolina, they're also very poorly paid. Well, it's a setup for failure, because I have 7 kids. You pull up and you sit in this little seat that you're too small for. So here's the thing. Outdated SMS just— they don't just slow you down, they cost you money.

5:46And I learned it the hard way. Before TechMetric, I was wasting time on inefficient processes, manual updates, back and forth calls with customers. Now I handle everything in one place. DVI, customer communications, payments, real-time reporting. It's all in one page. Since making the switch, my average repair order has jumped from $293 to $916. And it's not just me. Techmetric powers almost 10,000 shops nationwide.

6:11By the time you're hearing this, it probably will be 10,000 shops, helping them grow and operate smarter. If you're tired of losing time and money to outdated systems, tap the link in the show notes and see what Techmetric can do for you. Hey guys, Kari Lynn with Turnkey Marketing. If you are looking to increase cars and you're looking for the right demographic to go after, you want to get the right people who need auto repair right now.

6:35Then give us a call. We have a service called Direct Track and it utilizes AI to find people in your area who are the great demographic that you want to go after, have raised their hand and opted in saying, I need auto repair help right now. We send them an email. As soon as they open the email, we then get their physical address, follow it up with commercial ads on all their streaming services like Hulu and YouTube and ESPN, Fox News, all those different things.

7:02And then we also get their physical address and we start sending banner ads and display ads to every single device in that house. It has been incredibly effective. It has made shops seem like they're everywhere to those people who need repairs right then. And I mean, I'm telling you guys, the return on investment has been huge. So if you want to increase car count, you want to get great people in the door, give us a call or reach out to us and ask us about DirectTrack Marketing.

7:32And then the teacher tells you everything that's bad about you that they see in your kid. So, yeah, it's a setup for failure. I don't know. I mean, I think so. My frame of reference for the educational experience is unjustly skewed because when we were about to have our first child, Amanda, my wife, said, hey, I want the kids to go to private school.

8:02And I said, kids don't need to go to private school. I went to public school and it went fine. She said, Mike, you went to public school and then you dropped out of college. Touché. And I was like, but I mean, think about how much a good private school costs. And she said, there's a— I mean, we have the means to do it.

8:19And my wife is not sarcastic. She is not snobby at all. But she knows how to get a jab in when it's going to make a point. She said, Mike, when you go to work, people say, hey, Mike. When I go to work, people say, excuse me, Dr. Allen. I went to private school. Our kids are going to private school. So I laughed and we did that.

8:42But they've been in the same private school since kindergarten. And actually, my oldest, my 15-year-old, is going to be a rising 11th grader. And he's leaving the private school to go to a public early college trade school. And he's going into their welding program. So it'll be half the day is core curriculum at an advanced level 'cause it's a magnet school. And half the day is welding taught by the community college instructors.

9:09And so, you know, he came to us and intelligently articulated that, 4-year college would be wasted on him because he hates sitting still in a classroom. And he doesn't want to sit in an office. He doesn't want to own a business. He wants to work with his hands and fix things. Well, okay, but I still want you to maintain options. I want you to have the option to change your mind.

9:37So you still have to maintain academic excellence. And he's done that. So we're We're pursuing that for him. All right, yeah, the trades are hot. They're coming back. Yeah, the pendulum has swung in the other direction because now all the folks that went and got their $100,000 student loan to get a 4-year degree in French literature are being replaced by the AI wave.

9:59My daughter spent her last 2 years in high school working part-time in a mango shop. Nice. And she loved it too much. Then she went to a semester of college and then she said, "Mom, I know you're not gonna like this, but I'm gonna take a semester off and I'm just gonna work. So she's back in an automotive shop. I don't know, I don't quite get it.

10:20Like you were having fun hanging out with your friends in college. I don't know how you think this is better, but. I think the personal responsibility that is thrust upon you when you go to college, a lot of kids thrive and they become adults and a lot of kids crash and then the boomerang kids, you know, they're just not ready for it yet.

10:41And that's okay, they don't have to be ready yet. But the emotional intelligence to realize that it's not for them and to pull the plug before they've got $100,000 of student loan debt, or they've used $100,000 of your money for an education they're not taking seriously. I think it makes sense. Well, she has a great first semester and she says she's going back next semester.

11:03So I don't, knock on wood, hold my, it's not that I, like, I really respect what your son did. It's not that I don't think that there's another path for her. And if she was super passionate about going in a direction, 1,000% support that, whatever that direction is. And I love how you're thinking about your kid having optionality, right? But she doesn't have that same, well, at least she hasn't expressed to me that same drive toward another path.

11:37We're almost 10 minutes in. I think now it would be appropriate to introduce yourself. Since we talked about me, are you my therapist? What's going on here? Well, I thought we hadn't started yet. No, we're just talking. So this is seriously, this is how I start almost every episode is I just hit record and we just keep chatting. And eventually we do introductions sometime after like the second ad break.

11:57Perfect. I'm Jessi Jackson. I'm a mother of 7 and I used to be able to say I also had 7 automotive repair shops, but we've We have 8 automotive repair shops now. So you have 15 kids. And we're not going to have an 8th child. So that will never happen again. That ship has sailed. Yes. Well, I mean, you have 15 children then.

12:20Something like that. Yeah, someone's always crying. Isn't that the truth? How did you find yourself in the automotive world? I, like you, my, one of my grandfathers had a hitch shop and the other one had an aviation repair shop that I hung around in. I think there's something like that molds you even though you don't realize it is. Like, I never saw myself in brick-and-mortar automotive, but I certainly felt comfortable in the back of a shop.

12:47And I used to be an environmental engineer. The bottom sort of fell out of that market with the 2007-2008 crash, and I moved into software product, like B2B softwares, and I happened to fall into a project which was in the automotive space. So I knew a ton about the space. So when we got bought by private equity, I saw a huge opportunity in the brick-and-mortar automotive space.

13:16This was 2021. So the stats at the time were 6 out of 10 owners are retiring in the next 10 years and they don't know how they're going to do it. And most of them don't have a succession plan. So really just leaped into brick-and-mortar automotive repair. And so we've grown from $0 to $17 million in the last 4 years. That's awesome.

13:38It's been a fun ride. So is your growth model, because your company are the guys that are walking around all the trade shows with t-shirts that say, "We buy shops," right? It's so funny to hear you say that, like, "Oh, your company." I'm like, "Yeah, there's just me and Brian and Kevin, like, just the 3 of us, but yes." Well, I mean, it works.

14:01And at this event, we're at Tectonic 2026, we're wrapping up, we're in the final afternoon. You've got a dude in a blow-up mango suit walking around. Oh yeah, yesterday he was here. For fun, just for whimsy. Well, and no sign or anything on him about what he is, but I felt like you guys were just kind of hanging out and people who would come up and it's a conversation starter and you're reading the badge.

14:23Is that an owner? Where's the shop? So is that a recruiting, low-key recruiting methodology to find your next, find your acquisition? You know, it's more like just an attention-getter for people who are looking for us. So we did— TechMetric invited us to speak, which we'll see if they regret now. But when did you talk? We spoke yesterday. Apparently our session was the most registered session, or at least that's what they told us.

14:56Maybe they told everyone that. What was the title? Oh, good question. What was the subject? It was— I mean, the title was something about growing your automotive repair empire from zero to 8 figures, just what we've done. And I think the subject matter was both 2 topics, one growing through acquisition, which has to happen. There's 50,000, 40,000 to 50,000 shops that are going to close their door in the next 3 years.

15:21So that's on us to sort of step up and do those acquisitions and let the people who have been holding up our industry for the last 30 years retire and move on to their next phase of life. And then sort of the second piece of that is, okay, once you own an automotive repair shop, like what makes it grow? So oftentimes we'll take over a shop and see 100% growth in 12 to 18 months.

15:45And then we sort of steady out at a 30% compound annual growth rate, like inside of the shop. So we had less than an hour, but we tried to hit all of those points. A lot of people are looking to grow. Yeah. So, I think about where I've— like, I've run into Brian a few times at different events. I think the first time I saw him was at the Tool and Equipment Association meeting in Arizona somewhere.

16:12I don't remember. And I think at the time— were you guys working together already? This was like 3 years ago. I don't know, what year was it? I feel like it was '21, '22. Probably. He had like really big dreams of of massive growth. So maybe that was right after you opened up. Oh, that was probably right after I sold him into partnering with me, which he may or may not regret.

16:33But I mean, seriously, you know, $0 to $17 million in just a few years is pretty dang impressive. Where, okay, so that's 5 years, '21 to now. What does it look like in '31? I'm sorry, in 31 years? What does Mango look like in 2031? Oh, in 2031, another 5 years from now? Yeah, that's a good question. Are you allowed to say?

16:56Do you not want to share that publicly? It's just that 5 years is, it's a difficult timeline to predict. Like I think by our very nature, like we're moving so rapidly, it's sort of hard to see that far down the pipeline. I'll tell you what we're working on, which we, you know, sort of that we talked about yesterday as well. It's like we have this first passion, which has been helping shop owners retire.

17:23And the second shop that we ever acquired, we acquired from a guy named Mike. And Mike's shop was downtown Albuquerque. You ever been to Albuquerque? Yeah. You came over? Very artsy town, yeah. No, no, that's Santa Fe. Don't get it mixed up. Okay, I see. Albuquerque's a very Breaking Bad town. Okay. Everybody needs a little crack in their life, so. Do we?

17:49So at that shop, it's just, it's a little rough, right? So there's a big homeless population, but Mike was the kind of guy who a homeless person would come by the shops and he would not shoo them away. He would invite them in and make them a cup of coffee. Like that's the kind of guy he was. And we bought his shop for a 3x.

18:12And after we had done the acquisition, Mike called us up. Jesse, Jesse, like, I want to take you to dinner. Okay, Mike, let's go to dinner. We'll sit down at dinner. I'm like, Mike, have you missed it? Like, you own this business for 30 years. Your dad owned it for 30 years before you. And Mike said, you know, I thought I was going to, but I just really haven't had time.

18:33Okay, Mike, what are we at dinner about? Why'd you call this dinner? He said, what's the pitch? This is the 1-year anniversary of the day you first called me. And I had been praying that someone would call me to buy my shop so that I could spend more time with my family. And that really stuck with me and became, I think it sort of changed how I was thinking about what we were doing into like, I'm not here to convince anyone to sell their business to me, but I'm just here for the Mikes of the world who want to go spend time with their family.

19:09Elite clients don't just learn more, they do more. We help shop owners build stronger teams, improve profitability, and create systems that don't fall apart when you step away. The goal isn't just growth. The goal is sustainable success and a life you actually enjoy living. Elite Worldwide. Okay, here's the deal. Uh, at Vision, I recorded an episode with Keith Perkins and Seth Thorson, and I figured that we were going to talk about NASDIF stuff the whole time, but we ended up talking about a AI the whole time, and they had just taught a class on building your own AI agents within your business, and it was an incredible conversation.

19:48And then after we recorded that, I went out into the show floor at VISION, and I talked to a ton of people who have been in the class, and they were talking about how 3 hours in that class had changed their entire perspective on AI, and they were building their own tools in just 3 hours of training. You know, it blew my mind.

20:04I've got to have that in my business. And so here's the deal on Saturday, June 13th, I'm flying Seth to Raleigh, North Carolina, and we are going to have a full day— not 3 hours, but a full day class, breakfast, lunch, and dinner included. If you want to come down the night before on Friday the 12th, we're going to do Friday night shenanigans at my business at the, the Car Fix Bar and Lounge.

20:25It's going to be a great time. I think it's going to change the nature of how we do business. This class is for owners and GMs only. There are limited seats available for this class because it's very hands-on. You're going to need your laptop, you're going to need an active subscription to the AI of your choice. I recommend ChatGPT and Claude AI.

20:42Early sign-up discount, it's $8.99. If you sign up after May 17th, it's $12.99. Tap the link in the show notes or scan the QR code on your screen to learn more. It's going to be awesome. But as we did acquisitions, we encountered like another kind of shop owner and it was, you know, the Mike who unlike, we should give him another name, the Chuck who unlike Mike who retired on that 3x, who we give a valuation to, like, this is what your business is worth.

21:15And they look at that number and think, I am dying at this desk. I'm going to die with a wrench in my hand because I can never afford to retire for that number. There's a lot of those. Plus add Social Security. So we started thinking about like, how can we help that person? Because for the last 3 or 4 years, when Brian and I meet with them, We just say, you know, I hope this was helpful to you to learn how businesses are valued.

21:41Now you have the tools to make your business more valuable. I'm happy to help. Call us up at any time. You know, we're friends. Like, thanks for taking the time, but I can't offer you, you know, what you need to have. And so I think this next round of Mango is about helping, you know, that Chuck or that shop owner who wants to exit their business but needs a bigger multiple to do it.

22:04How many individuals do you tend to speak with before you find another realistic acquisition? And like, for me, when I was trying to find another shop, and I have a very defined geographic area that I'm looking at, I'm not, I'm not looking in other markets. I would talk to 10 or 15 before I've— and they all had, you know, little to no documentable net profit, and they all thought it was worth $1 million, right?

22:30Everyone's number. Every shop's worth a million. They're forgetting to adjust for inflation. Because it was worth a million 5 years ago and they still want a million. They need more. Yeah. Um, so how many are you talking to before you find one that it's like, we should put an offer on this one? Those are pretty good numbers that you have, 15 or 20 only.

22:49I think that we, you know, it's 1 to 3 out of 100. Wow. Okay, well, so that means that you guys, uh, 90% of what you do is is vetting those, those situations in those businesses? Or what does your day-to-day life look like within Mango? Good question. So Brian and I used to do everything, but now we have a whole corporate team who does finance.

23:19We have a district manager, we have HR. HR was our first corporate hire and was a huge relief, especially for Brian. So I I oversee our marketing and I run acquisitions. Basically those two things. Geographically, are you spread out far? Or are you all pretty well densely? Yeah, with the exception of one shop, we can drive to all of our shops in about 4.5 hours from our home base.

23:49And home base is where? Albuquerque. Okay. But I feel like on my social feeds, I'm seeing some of your branding and marketing, because you're very much leaning into the female-owned and operated auto repair business. That is Mango that I've been seeing those ads on socials, right? No? I don't know. You don't know? Maybe. I didn't run this. I feel like it was— man, I should have found one of them to have pulled up.

24:24I'd love to see it. I don't do any show prep. I'm terrible. What are we advertising? I think you're just selling partnership. What I recall, and I might be misremembering, I do a fair amount of that, is that you were selling the dream of partnership and being part of something bigger and having your shop being part of a group of shops that are led.

24:48I think perhaps you're seeing into the future because we have not run those ads, but I think it is on the docket for this summer. Right. Are you thinking about any ground-up builds or is it all acquisition at this point? We have thought about some ground-up builds, especially you're familiar if you're in one market, you know the locations that would be hot if you did a build there, but we always perform them out and then we're like, hmm, makes more sense to acquire something that's already profitable than to build something from the ground up.

25:20Yeah. Do you typically look at shops that are already operating at a high level and are profitable or do you want fixer-ups? Or shoppers? Both. So about half the shops we've acquired have been turnarounds. So like the first shop we bought for $5,000 and we opened that December 27th, 2021 after I made Brian work over Christmas weekend to get it ready to open because doggone it, we were not going to close for a minute.

25:47And now that shop is, you know, $3 million operation they were doing. $750,000. So we've done that about half the time, and about half the time we're acquiring something that's already doing much better. So I think, you know, this year our focus is on cash flow positive acquisitions more so than turnarounds. Do you have a fixed footprint that you're looking for? I want 10-bay shops, I want 8 bays, or with road frontage, or what, what's the ideal model for you?

26:20We look for stuff that's 7 or more bays. Although that said, We just acquired a 5-bay. They had their, this week was Mango's best week ever, which we've been hitting that a lot. So it's super exciting. But this brand new 5-bay that we acquired in January did $61K this week, which is— Love it. Our 12-bay in the same city did $63K. So we're like, wow.

26:51Is there inter-store communication? Are they like, we're coming for you boys? Yes. They're a little competitive and we're building like a leaderboard. I think in a friendly way. Like the manager of one of our shops used to work under the manager of the other shop. And so, you know, he's proud he's trained this manager who's kicking his butt, but he's also like, dang.

27:14Yeah, I'm coming for you. Very cool. Sure. So real quick, I want to back up earlier. You said that you have 7 children? Yeah, that's true. Age gap, how far are they apart? The baby's 2, and you know I have college-age kids. So there you have it. I'm exhausted just thinking about that. You need more shops just to afford the food budget.

27:38Exactly. I'm driven just to be able to feed my children, especially the teenagers. And come October, we'll have 5 teenagers. I've got 2, and I swear that our grocery budget has doubled. In the last couple of years. It's insane the amount of food they're able to put away. Because they eat like probably 3 times you each. It's madness. But great source of joy, great source of frustration.

28:03Yeah. How many of them do you think are going to want to be a part of Mango? You know, that's interesting because my oldest daughter definitely interested, surprised me. And when I say she was working in the shop, she's not like answering phones. She's back there changing oil, changing tires, doing inspections, putting the car on the lift. So that's, it's really cool to see her hard work ethic.

28:28I didn't think anyone else was very interested, but they, you know, have expressed an interest. Like we're big enough now, we get lots of offers that we turn down. And they heard me talking about an offer and my 14-year-old daughter said, you're not gonna sell Mango, are you? And I said, well, no, not now. The answer right now is no, but why do you care?

28:52One day. But she's like, "But Mango is like ours. Like we go there and we get a drink and dried mangoes." And I'm like, "Okay." Apparently they have some kind of attachment to it, but we'll see how things develop. When the numbers are right and the number is right, you can supply them with all the mangoes they need. So a lot of folks that have come in and experienced this kind of rapid growth, like what you've had, And they're very intentional and they're very target-driven.

29:23And I feel that from you to a degree. It's a weakness for me because I'm all over the place. But they have a fixed target. Like, I've got an acquaintance whose target is 30 stores by 2030, right? And that's been his target since 2015. And he's going to get there, right? And his goal is to get to that roughly 30 stores and to get rolled up with partial equity to be part of a bigger group to get rolled up a second time, right?

29:59And I mean, the financial realities of that plan are staggering. Is that in the future for Mango or do you think in terms of that or? So right now there's two paths. We're continuing to grow by acquisition and we are also putting a co-op co-op together, where the co-op is just a group of shops, a group of shop owners who want to exit their business in a couple of years, do not want to exit at a 3x, but something like a 9x is much more exciting to them.

30:31And why wouldn't it be? Do you cuss on your podcast? All the fucking time. This is like— I said this yesterday, and private equity was standing in the back of the room, and they had to talk with me. But I said, like, fuck private equity, because The company that I mentioned to you before that we sold to private equity, like, this was a real moment for me because I thought, we have put our blood, sweat, and tears into this company, and what did you do?

30:57Nothing. You showed up with a checkbook, and you wrote a check, and I'm going to leave it there. You wrote a check. That's all you brought to the table. And you eviscerated the soul of the business. Yeah, so you see this spread. Like, we had that rumored Left Lane Auto selling for 16x earlier this year, and then you have a shop owner selling for a 3x, or, you know— bigger shops of 5, 6 maybe.

31:22But that gap on the table, that 9 or 10x between what private equity is getting and between what the shop owner is getting is literally like the difference between a shop owner being able to retire and live their life how they want to live it versus eking out of retirement and worrying about whether they take Social Security at 62 or 65. And how long they can make it.

31:48Like that is a huge gap of wealth that right now we're letting someone outside the industry take. So the premise here is how do we as shop owners take back a bigger chunk of that multiple? And so when Brian and I originally started talking about this, like the answer was acquisitions. Like you get to a certain, you get to $20 million EBITDA, you're gonna get, you know, a much higher multiple.

32:10Maybe not a 16, you're gonna get a 14, a 15, a 13, somewhere up there. Look, when I first opened my shop, I thought, my old systems would keep up, the software that I had would continue to evolve. But as we grew, the slow estimates, scattered workflow, increasing downtime, it really just, it was becoming a real problem. That's why I switched to TechMetric.

32:32It's not just software, it's a complete shop management system that makes my life easier. Smart jobs, instant estimates, integrated payments, integrated financing options. I mean, it allows me to focus on the work that actually makes me money and not get bogged down in the other details. My shop's repair orders have jumped over 300% since switching to TechMetric, and when I need help, their support team responds in real time.

32:55I actually was online with them asking questions just this week, and I got answers in minutes rather than having to wait for callbacks and emails days later. If your system is holding you back, it's time for a change. Tap the link in the show notes and see how TechMetric can help you move your shop forward. But it left this gap with the Chucks who needed a bigger multiple and aren't going to go out there and, you know, acquire 8 shops.

33:17So how can we help them in a And it's through this partnership that we're calling the co-op. So there are a bunch of organiza— not a bunch, there's a handful of organizations that I'm aware of that are out there trying to create bundles of small operators, ones and twos and threes, because they call me, right? Yeah. To package for sale at a higher multiple.

33:38I've never really looked seriously into any of them because, yeah, the biggest limiting factor to my business's growth is me because I'm a control freak and I won't let go and delegate effectively. Yeah. Um, and but what I'm seeing is these groups are being bundled together for presentation and package and sale at a much higher multiple. And it was great for the people that are exiting their business.

34:02And I don't know if you sat in on the panel this morning, the coaches panel, but one of the questions I asked was about PE. Is packaging and selling to PE a smart smart exit strategy, while at the same time we know that a lot of the time, I'm not gonna say all the time, but a lot of the time when, when you pick the equity group of your, of your choice name comes into town and buys up the little 5, the 5-shop chain, the quality backslides, the customer satisfaction backslides, the team satisfaction backslides significantly.

34:38And so we can look at that as an opportunity to hire key players and bring them into our organization, but is that a betrayal of the team that you have built and the community that you support for the last 20 years, or is it a smart way to exit your business? So that was kind of a loaded question, but I wanted to throw a spicy meatball out there for them to chew on a little bit.

35:00You seem to feel like it's a little bit on the betrayal side, or I'm saying I like fuck private equity. I think we all have to answer that question for ourselves. And it's like, yeah, is there a dichotomy, like maybe F, like low market private equity who's taking a huge multiple, but then maybe like mid market private equity, like maybe let them have it.

35:22Like who do you end up selling to? Like what's the platform? Does your branding and the culture that you've built like remain inside of the business? I don't know the answers to all of those questions. All I know is, and I'm gonna get emotional, this has been a rough conference I think for all of us in the automotive repair industry. All I know is life is too short and you don't know how long yours is.

35:48So at the end of the day, we all have to think about what we want our lives to look like. And if someone wants to own their shop the rest of their life, that's wonderful. Like I want them to do that. But if they want to exit and drive their RV around the country and visit all their children across the country, like I want to help them do that.

36:09So I think the larger question, I don't know, like consolidation happens, it's gonna happen whether we're a part of it or not. You can be the holdout, you can be the house that's surrounded by, you know, a huge apartment building. And that might be the right choice for you or someone who's listening. And I will back that person 100%. And if they want me to stand in front of the bulldozer, I'll do it.

36:33But everyone has a different, like, you know, path for their life. There are those owners who desperately want to go spend time with their families. So how do we get there? This is a means to an end for Chuck to retire and spend time with his wife and his kids. I would say his wife and his kids think it's worth it that maybe customer service isn't as good at their shop.

36:54But on the other hand, you probably think the same way I think what Mango Automotive is doing and what a lot of people in the industry are doing is raising the bar for customer experience. So when you bring that to the table and you bring that to the industry, maybe you make a dent in your corner of the universe. And that's one of internally, that's our goal at Mango Automotive to make a dent and to bring equality both to our customers and our employees.

37:28So we're working on that. And will it in the end make a difference to save one starfish if a fisherman goes and catches it? I don't have the answer. But I just want to help Chuck spend more time with his kids. So tell me how the co-op works. Is it you find somebody who is a good candidate for the co-op and Mango buys 51% and bundles, and then they get the second bite of the apple when Mango packages for sale?

37:58Or how does that work? Yeah, it's quite different from that. So I would consider that more just like private equity is doing that right now. Like we've gotten a bunch of offers recently to buy 51%. Like you want to buy control. But this is different because it's sort of remaining with the co-op owners. So right now we're bringing together about 40 shops, give or take, that have $500K-ish in EBITDA.

38:24That gets us to our $20 million threshold. Once all of those shops have signed LOIs and we have the $20 million in EBITDA amassed, we will hit trigger point one. At trigger 1, we will do a stock swap. So all of us owners, Mango included, that now own our little company, instead of owning 100% of our company, will own X percentage of this larger company.

38:50And then we will season the larger company, right? And there will be many challenges during this time to work out how management is happening, how finances are flowing. Then we'll sell 12 to 18 months after trigger 1. Is the stock valuation or distribution equivalent to EBITDA contribution? Exactly. Okay. Yeah. What's the process like in that 12 to 18 month window? What's, when you say we're going to season that new entity, what does that mean?

39:23What do you do in that timeframe? Or do you just package it and for sale? You know private equity now as well as I do. So when we first started 4 or 5 years ago, we could be like, hey, we're friends. We're selling together. And we're different brands and we're different, we're run differently, and you could sort of see that increase multiple.

39:44But right now, that's not really the game, right? I think the question that I ask capital that calls us is, what are you looking for? What's important to you? And that's what we have our eyes set on. So it is not only shared financial reporting as number one, and then the second is, is shared decision-making, right? They want to know that all these companies have the same HR policies, that we're all sort of running the same playbook.

40:14And then finally, like, cohesiveness around processes and procedures. So it will be the task of that, you know, within that 12 to 18 months to shore up all of those things. We are truly becoming one company. So owners owners at that trigger point, uh, will have the option. Do you want to grow? Do you want to manage multiple shops in your area?

40:37Do you want to fade away? Do you already have a manager in place so we can begin to make those changes? We've interestingly found a lot of shop owners signing up that don't want to leave their businesses yet, but they see it as access to growth. Okay. Interesting. How do you stay the boss in that situation? Is that what we want? Is that what you want?

41:05No, I think there's— and I'm not sure I am the boss anymore, right? We're— Maybe the boss is the wrong word. We are the bosses. Maybe that's the wrong word. We're going together. If you want to go fast, go alone. If you want to go far, go to go together. Okay, I like that. Um, well, you're putting— you're trying to get to that cumulative EBITDA number.

41:31How far along that path are you now? Good question. I think if I'm asking questions that you're like, I don't want to share this shit publicly, just be like, I don't want to share that shit publicly. It's fine. Yeah, well, I just can't because we have NDAs. Okay, so I have not been asked that question, so I haven't checked like what things I can exactly share and what is too much.

41:52I gotcha. So we'll just pass on it. Fair enough. Fair enough. Super. So you said 5 years is a long way. So early on you said 5 years is a long way out to think. And reading between the lines, that means 5 years you're going to be at or beyond that trigger point and maybe even after the 12 to 18 months after that, hopefully.

42:13That'd be great, right? What does the end of '26 look like for Mango? Not the co-op so much, but are you trying to get another 2, 3, 4 locations this year? No, we're building the co-op and we have a focus on acquired. Cash flow positive shops this year. There's a couple new areas that we're looking in. In fact, we're, as soon as I leave here, we're going to go tour some shops in Houston.

42:35So that'll be fun. Nice. Anybody we know? I couldn't even tell you their names. I have an NDA, but Kevin set that all up for me. So I couldn't even tell you. There's some smart dudes and ladies operating in Houston operating really good businesses. What an incredible market this is. Oh, such a good market. I lived in Texas for a dozen years.

42:57I love me some Texas. What's your favorite market? My favorite market? Yeah, to operate automotive repair in the country right now. Well, it has to be Albuquerque right now. We have 4 shops there. It's like our— Just 'cause that's where you are doesn't mean it has to be your favorite. You know you have an affection for your firstborn. That's fair enough. That's fair enough.

43:15That's fair enough. Regionally, are you looking all over the country or is it— So for the co-op, yes, but not for acquisitions. We are very much focused where we currently are. So we're already in West Texas, New Mexico, Arizona. So number one priority is always more shops to fill out the cities that we're currently in. Number two priority is to move eastbound in Texas and move in other parts of the state in Arizona.

43:43Arizona. I would say that's probably about as far as we'll get in 2026. And then 2027, we may start moving into Colorado, Utah, and Nevada for some acquisitions. Very cool. What's the most fun thing that you do in this? Is it the acquisition aspect? Is it the marketing aspect? Is it just— I mean, I love a thrill. I'm— that's why I have so many children and so many businesses, because you get another little thrill thrill, but you can only get that.

44:11That doesn't sound like thrill, that sounds like masochism. You can only get that dopamine hit so much. Like, after you've acquired 8 shops, you don't quite get it as heavy anymore. So you gotta find another way to do it. That's why we're doing a bundle of 5 shops. What? You gotta go buy a bundle of 5 or 6 shops from someone. I think the co-op's my next hit, right?

44:31I'm just an addict over here. Okay, well, thank you so much for coming on. Time goes fast. I know, you know, when we sit down, next thing you 45 minutes have gone by. Can I tell your audience how to reach out to me? Absolutely. Okay, if you're interested in the co-op or selling your shop, I'd love to chat with you, but the best way is to text Kevin, who really owns my schedule.

44:53Wait, was Kevin the one walking around in the inflatable mango costume? No, but he did hire the inflatable mango costume man. Kevin was next to the inflatable mango man. If I wanted to be the dude in the inflatable mango suit— I mean, you would have just had to let us know. Or you would have had to apply to that ad on Gigworker.

45:13Yeah, well. We bought him drinks too, so I think it wasn't that bad of a gig. He looked like he was having a good time. Okay. Maybe. Kevin is 505-441-4779. 4779. Yeah. Awesome. Or you can email me, jessiejesse@mangoautomotive.com. I'm curious what our listeners think about this whole concept about the co-op, about this rapid growth model, about acquisitions and exit strategies. Call and leave a voicemail or text 704-266-3377, 704-CONFESS.

45:57And oh my gosh, I want to know too. Come tell us what you think and then we can have a debate. I love a good debate. I support this all day long. Thank you. Thanks, Mike. Thanks for listening to Confessions of a Shop Owner, where we lay it all out, the good, the bad, and sometimes the super messed up. I'm your host, Mike Allen, here to remind you that even the pros screw it up sometimes, so why not laugh a little bit, learn a little bit, and maybe have another drink.

46:20You got a confession of your own or a topic you'd like me to cover, or do you just want to let me know what an idiot I am? Email mike@confessionsofashopowner.com or call and leave a message. The number is 704-CONFESSIONS. Fest. That's 704-266-3377. If you enjoyed this episode, be sure to like, subscribe, or follow. Join us on this crazy journey that is shop ownership.

46:43I'll see you on the next episode. All right guys, AI class. Learn how to use AI so that you can make it your bitch and you don't become its bitch. Saturday, June 13th, Seth Thorson's teaching a full-day class in Raleigh, North Carolina. Tap the link in the show notes or scan the QR code on your screen to learn more. It's going to be awesome.