1 00:00:02,720 --> 00:00:16,720 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:18,560 --> 00:00:21,720 Speaker 2: Hello and welcome to another episode of the Ad Thoughts Podcast. 3 00:00:21,840 --> 00:00:23,320 Speaker 2: I'm Tracy Allaway. 4 00:00:23,040 --> 00:00:24,239 Speaker 3: And I'm Joe Wisenthal. 5 00:00:24,600 --> 00:00:26,360 Speaker 2: Joe, do you think it's fair to say it's been 6 00:00:26,600 --> 00:00:30,639 Speaker 2: kind of kind of a quiet year for big deals. 7 00:00:30,760 --> 00:00:31,560 Speaker 2: I think that's fair. 8 00:00:31,640 --> 00:00:33,760 Speaker 3: I feel you're like kind of a quiet year. Oh no, 9 00:00:34,040 --> 00:00:37,800 Speaker 3: dot no for big deals. Yes, actually this has been 10 00:00:37,880 --> 00:00:40,640 Speaker 3: kind of, you know, one of the big thematic surprises 11 00:00:40,680 --> 00:00:44,040 Speaker 3: of twenty twenty five. Obviously when the new administration came in, 12 00:00:44,479 --> 00:00:47,240 Speaker 3: like deals, and at least for now, I would say, 13 00:00:47,320 --> 00:00:50,800 Speaker 3: largely you know, macro stuff, we actually have not gotten 14 00:00:50,840 --> 00:00:52,000 Speaker 3: a big deals with so far. 15 00:00:52,320 --> 00:00:54,720 Speaker 2: Right, the reason we haven't had that many deals is 16 00:00:54,760 --> 00:00:57,840 Speaker 2: because there's been so much news arguably, right, there's all 17 00:00:57,840 --> 00:01:01,440 Speaker 2: this uncertainty in the broader market. Yeah, people aren't really 18 00:01:01,480 --> 00:01:02,880 Speaker 2: sure what they want to do if they want to 19 00:01:02,960 --> 00:01:05,639 Speaker 2: risk it all. But that said, there is some stuff 20 00:01:05,680 --> 00:01:09,479 Speaker 2: getting done, and in particular, there was recently a very 21 00:01:09,560 --> 00:01:13,240 Speaker 2: very big deal, a blockbuster all cash deal, some have 22 00:01:13,360 --> 00:01:17,000 Speaker 2: been saying, and it involves someone who's been on the show. 23 00:01:16,800 --> 00:01:18,559 Speaker 3: Before, a friend of the podcast. 24 00:01:18,680 --> 00:01:23,679 Speaker 2: That's right. So Brad Jacobs, his new company, QXO, bought 25 00:01:23,959 --> 00:01:27,360 Speaker 2: Beacon Roofing for I think it was eleven billion, is 26 00:01:27,400 --> 00:01:31,440 Speaker 2: that right? So again, an all cash deal for eleven 27 00:01:31,480 --> 00:01:34,760 Speaker 2: billion dollars in this market kind of notable. We should 28 00:01:34,800 --> 00:01:35,399 Speaker 2: talk about it. 29 00:01:35,959 --> 00:01:37,560 Speaker 3: I love talking to Brad. We've talked to him a 30 00:01:37,600 --> 00:01:40,800 Speaker 3: handful of times on the show. Often we've talked about 31 00:01:40,800 --> 00:01:44,920 Speaker 3: his philosophy of buying companies, turning them around, turning them 32 00:01:44,920 --> 00:01:48,400 Speaker 3: into billion dollar juggernauts. We talked to him about logistics 33 00:01:48,400 --> 00:01:50,800 Speaker 3: and supply chains. But now we can talk about something 34 00:01:50,840 --> 00:01:53,520 Speaker 3: specific on how he's going to turn one specific company around. 35 00:01:53,560 --> 00:01:54,920 Speaker 3: So I'm excited exactly. 36 00:01:55,000 --> 00:01:58,600 Speaker 2: Okay, so let's get into the specifics. We have Brad Jacobs, 37 00:01:58,680 --> 00:02:02,920 Speaker 2: billionaire founder of XPO, g XO, QXO, as I mentioned, 38 00:02:03,000 --> 00:02:07,880 Speaker 2: basically all the XO companies plus United Waste, lots and lots, 39 00:02:07,920 --> 00:02:10,760 Speaker 2: a serial entrepreneur, let's just put it that way. Brad, 40 00:02:10,800 --> 00:02:12,600 Speaker 2: thank you so much for coming back on all lots. 41 00:02:12,680 --> 00:02:14,880 Speaker 2: Trace is great to be here, all right, So congrats 42 00:02:14,919 --> 00:02:15,480 Speaker 2: on the deal. 43 00:02:15,840 --> 00:02:16,160 Speaker 4: Thank you. 44 00:02:16,400 --> 00:02:18,440 Speaker 2: From what I understand, this has been in the works 45 00:02:18,440 --> 00:02:20,040 Speaker 2: for quite a while and there was a lot of 46 00:02:20,080 --> 00:02:20,760 Speaker 2: back and forth. 47 00:02:21,080 --> 00:02:23,919 Speaker 4: Yeah, so before we even did Beacon. We were looking 48 00:02:24,000 --> 00:02:25,640 Speaker 4: at fifty five, as you know because I was on 49 00:02:25,639 --> 00:02:28,680 Speaker 4: the podcast, looking at fifty five different industries and trying 50 00:02:28,680 --> 00:02:30,840 Speaker 4: to pick the one that matches our skill set, that 51 00:02:30,880 --> 00:02:33,520 Speaker 4: matches our playbook, the best, the things that worked for 52 00:02:33,600 --> 00:02:36,160 Speaker 4: us at all the companies that you mentioned before. And 53 00:02:36,200 --> 00:02:39,280 Speaker 4: then we settled on building products distribution because we liked 54 00:02:39,280 --> 00:02:42,720 Speaker 4: it a lot, the size, the growth, the fragmentation, the 55 00:02:42,760 --> 00:02:45,720 Speaker 4: opportunity to apply technology. And then we zeroed in on 56 00:02:45,800 --> 00:02:48,639 Speaker 4: Beacon and we said, Beacon is the one that's that's 57 00:02:48,680 --> 00:02:51,040 Speaker 4: the girl I want to marry Becon and we said, 58 00:02:51,040 --> 00:02:53,440 Speaker 4: this is like a perfect match for what we do, 59 00:02:53,960 --> 00:02:56,680 Speaker 4: and unfortunately they didn't want to sell, so we had 60 00:02:56,720 --> 00:02:58,920 Speaker 4: to do a little hostile there. But we're past that 61 00:02:59,000 --> 00:03:00,840 Speaker 4: and now we have a friend, the deal and really 62 00:03:00,840 --> 00:03:01,880 Speaker 4: looking forward to closing it. 63 00:03:02,320 --> 00:03:05,280 Speaker 3: Tell us about Beacon, what is the actual assets that 64 00:03:05,320 --> 00:03:06,480 Speaker 3: they have that you're acquaring. 65 00:03:06,560 --> 00:03:10,120 Speaker 4: So Beacon's a distributor. It's a distributor of mostly roofing, 66 00:03:10,760 --> 00:03:13,280 Speaker 4: but they also do waterproofing and other ancillary products, but 67 00:03:13,280 --> 00:03:16,640 Speaker 4: it's mostly roofing. And what I like about that is 68 00:03:16,800 --> 00:03:19,359 Speaker 4: everyone has a roof. The roof's not going anywhere they're 69 00:03:19,360 --> 00:03:22,320 Speaker 4: not going into the metaverse. They're not going to weigh 70 00:03:22,320 --> 00:03:25,119 Speaker 4: to AI. I mean, all structure is gonna need a roof, 71 00:03:25,120 --> 00:03:27,640 Speaker 4: and there's gonna be more roofs needed next year, and 72 00:03:27,680 --> 00:03:29,240 Speaker 4: the following year and the following year. In ten years 73 00:03:29,320 --> 00:03:31,640 Speaker 4: now there's more, So there's underlying growth. 74 00:03:31,680 --> 00:03:34,079 Speaker 3: I love this simplicit everyone needs a roof. It's like, yeah, 75 00:03:34,120 --> 00:03:35,840 Speaker 3: I actually can't argue with that. All right, keep going. 76 00:03:35,840 --> 00:03:38,280 Speaker 4: Not only does everyone need a roof, but everyone has 77 00:03:38,320 --> 00:03:40,880 Speaker 4: to fix their roof every once in a while, so 78 00:03:41,080 --> 00:03:43,640 Speaker 4: roofs break. You know, fifteen twenty years you need a 79 00:03:43,720 --> 00:03:47,840 Speaker 4: new roof, and you have hurricanes and storms, and if 80 00:03:47,840 --> 00:03:51,160 Speaker 4: your roof is leaking, it's not a discretionary choice. You 81 00:03:51,240 --> 00:03:54,640 Speaker 4: have to fix the roof. So eighty percent of Beacon 82 00:03:54,720 --> 00:03:57,840 Speaker 4: sales is non discretionary if someone needs to fix their roof. 83 00:03:58,280 --> 00:04:00,760 Speaker 4: That's what I like about the business. It's a largely 84 00:04:00,800 --> 00:04:04,600 Speaker 4: nondiscretion stuff foot print. The footprint is North America, so 85 00:04:04,640 --> 00:04:08,120 Speaker 4: it's ninety seven percent United States of America, three percent 86 00:04:08,120 --> 00:04:12,680 Speaker 4: in Canada. Almost everything is manufactured and sold in the US, 87 00:04:12,800 --> 00:04:15,560 Speaker 4: and the stuff that's in Canada is manufactured for the 88 00:04:15,600 --> 00:04:18,240 Speaker 4: most part, and so there's not a tariff issue. So 89 00:04:18,400 --> 00:04:20,880 Speaker 4: it's an interesting business. It's a well positioned business. 90 00:04:20,920 --> 00:04:22,280 Speaker 2: And what do you plan to do with it now 91 00:04:22,279 --> 00:04:22,720 Speaker 2: that you have it. 92 00:04:22,880 --> 00:04:25,680 Speaker 4: I'm going to double the profit the same thing we do, 93 00:04:26,160 --> 00:04:29,039 Speaker 4: the same thing we did at Conway, at XPO, we 94 00:04:29,200 --> 00:04:31,919 Speaker 4: double the profits in three years. Same thing we did 95 00:04:31,960 --> 00:04:34,160 Speaker 4: with norber Dontresongle in Europe, which is a very well 96 00:04:34,160 --> 00:04:36,919 Speaker 4: managed premier company there. We double the profits again in 97 00:04:36,960 --> 00:04:39,440 Speaker 4: three years. We're gonna apply the same playbook. We're going 98 00:04:39,520 --> 00:04:43,560 Speaker 4: to start with communicating and talking to all the people. 99 00:04:43,640 --> 00:04:46,800 Speaker 4: And we announced the deal on Thursday morning, and at 100 00:04:46,760 --> 00:04:50,000 Speaker 4: eleven o'clock we had an all employees zoom and I 101 00:04:50,040 --> 00:04:52,479 Speaker 4: had the privilege and the honor and just the wonderful 102 00:04:52,520 --> 00:04:55,600 Speaker 4: experience of doing the zoom with thousands and thousands of 103 00:04:56,080 --> 00:04:59,520 Speaker 4: Beacon employees. And it was less me lecturing and giving 104 00:04:59,520 --> 00:05:02,080 Speaker 4: a speech and more asking questions and starting to learn 105 00:05:02,120 --> 00:05:02,560 Speaker 4: the business. 106 00:05:03,080 --> 00:05:07,559 Speaker 2: I'm really curious this wasn't officially a hostile takeover, although 107 00:05:07,600 --> 00:05:10,760 Speaker 2: as you mentioned it was, parts of it were hostile ish, 108 00:05:10,920 --> 00:05:14,680 Speaker 2: let's say hostile adjacent. So when you come into a 109 00:05:14,720 --> 00:05:19,600 Speaker 2: company like that that initially resisted your overtures for marriage. 110 00:05:19,640 --> 00:05:22,279 Speaker 2: As you put it, does that make it difficult to 111 00:05:22,520 --> 00:05:26,200 Speaker 2: actually start to integrate this, start to change the business model? 112 00:05:26,240 --> 00:05:29,000 Speaker 2: What is the relationship actually like with the workers? 113 00:05:29,520 --> 00:05:32,720 Speaker 4: Well, it does make it a harder start for about 114 00:05:32,760 --> 00:05:35,279 Speaker 4: ten seconds, but after everyone realizes, Okay, this is done. 115 00:05:35,279 --> 00:05:37,520 Speaker 4: We're buying, we're married, we're getting married here, we're engaged. 116 00:05:37,720 --> 00:05:40,160 Speaker 4: We have to make this work. That's history, that's past, 117 00:05:40,320 --> 00:05:43,080 Speaker 4: and the resistance is more on the senior levels. I've 118 00:05:43,080 --> 00:05:46,720 Speaker 4: been doing zooms since that Thursday. All employees zoom. One 119 00:05:46,720 --> 00:05:48,800 Speaker 4: of the reasons, well, the only reason my voice is 120 00:05:49,080 --> 00:05:51,560 Speaker 4: horse is because I've been doing NonStop zooms. I've been 121 00:05:51,600 --> 00:05:55,480 Speaker 4: doing zooms with fifteen or twenty branch managers and salespeople 122 00:05:55,520 --> 00:05:58,279 Speaker 4: and others at a time for an hour two hours, 123 00:05:58,440 --> 00:06:01,800 Speaker 4: learning the business and reaching out and really understanding two things, 124 00:06:02,320 --> 00:06:06,680 Speaker 4: which are one, what's going great in the company that 125 00:06:06,760 --> 00:06:09,880 Speaker 4: we'd be crazy to change, Like help us understand, like 126 00:06:09,920 --> 00:06:13,080 Speaker 4: what's the strengths of the company that is fantastic. You know, 127 00:06:13,279 --> 00:06:15,920 Speaker 4: it's a ninety seven year old company, it's a serious company. 128 00:06:16,279 --> 00:06:17,880 Speaker 4: What are the good things about it there that we 129 00:06:17,960 --> 00:06:20,359 Speaker 4: got to keep? And then the second question is what 130 00:06:20,440 --> 00:06:22,719 Speaker 4: can we improve what can we do better? What are 131 00:06:22,760 --> 00:06:24,560 Speaker 4: your needs? What are your gaps? How can we help you? 132 00:06:25,120 --> 00:06:27,120 Speaker 4: And we try to keep it simple, and all these 133 00:06:27,200 --> 00:06:29,960 Speaker 4: zooms and town halls we're having, we're trying to just 134 00:06:30,000 --> 00:06:32,960 Speaker 4: ask those two questions. And we sound a survey to 135 00:06:33,120 --> 00:06:36,599 Speaker 4: every employee at Beacon who has an email address, and 136 00:06:36,640 --> 00:06:40,240 Speaker 4: we ask them those two questions. We asked them, what's 137 00:06:40,279 --> 00:06:43,080 Speaker 4: working really well and what's your single best idea to 138 00:06:43,080 --> 00:06:45,719 Speaker 4: improve the company. We're going to read all those thousands 139 00:06:45,720 --> 00:06:48,800 Speaker 4: of responses and we ask them another question. We ask 140 00:06:48,880 --> 00:06:52,600 Speaker 4: them rate your job satisfaction on a scale of one 141 00:06:52,640 --> 00:06:54,919 Speaker 4: to ten, with ten being the most one being the least, 142 00:06:55,480 --> 00:06:58,000 Speaker 4: and we track that. So that's the baseline. So we're 143 00:06:58,000 --> 00:07:00,600 Speaker 4: going to keep surveying the employees and figure out are 144 00:07:00,640 --> 00:07:03,440 Speaker 4: we doing our job in terms of making people happy. 145 00:07:03,720 --> 00:07:06,479 Speaker 4: Are we doing our job of making people want to 146 00:07:06,480 --> 00:07:08,960 Speaker 4: come into work every day and really loving being part 147 00:07:09,040 --> 00:07:11,480 Speaker 4: of this organization. And if we take care of that, 148 00:07:11,600 --> 00:07:12,960 Speaker 4: if we get them a rale up, if we get 149 00:07:13,000 --> 00:07:16,040 Speaker 4: the engagement up, usually everything else falls in place. 150 00:07:16,480 --> 00:07:19,840 Speaker 3: Whether it was your initial due diligence sort of discovering 151 00:07:20,040 --> 00:07:24,680 Speaker 3: Beacon or in your zoom's post acquiring Beacon. What are 152 00:07:24,760 --> 00:07:26,240 Speaker 3: the weaknesses that you believe you. 153 00:07:26,160 --> 00:07:29,280 Speaker 4: Confess So I don't like the word weakness. Okay, what 154 00:07:29,400 --> 00:07:34,040 Speaker 4: are the opportunity? Thanks. That's a subtle reforming, but it's 155 00:07:34,080 --> 00:07:36,320 Speaker 4: important one because you don't want to go into a 156 00:07:36,320 --> 00:07:39,200 Speaker 4: company and demortalize. People say what's wrong with you? You want 157 00:07:39,200 --> 00:07:41,440 Speaker 4: to you want to talk about where can we do better? 158 00:07:41,840 --> 00:07:42,960 Speaker 4: It's working, Okay. 159 00:07:43,360 --> 00:07:45,480 Speaker 3: We can do better under your under your management. 160 00:07:45,520 --> 00:07:48,920 Speaker 4: So the honest answer is I have a lot of hypotheses. 161 00:07:48,960 --> 00:07:50,760 Speaker 4: I have a lot of ideas of things that have 162 00:07:50,800 --> 00:07:53,040 Speaker 4: worked in the other companies that we've run, and this 163 00:07:53,160 --> 00:07:57,080 Speaker 4: so well. But I don't totally know yet such as 164 00:07:57,880 --> 00:08:00,560 Speaker 4: I'm going to do. But I will know in a 165 00:08:00,560 --> 00:08:02,600 Speaker 4: month from now. And the reason I'm going to note 166 00:08:02,640 --> 00:08:04,240 Speaker 4: for a month from now is we're going to get 167 00:08:04,280 --> 00:08:08,320 Speaker 4: the input from thousands of thousands of Beacon employees who 168 00:08:08,360 --> 00:08:09,840 Speaker 4: are in the game every day and have been in 169 00:08:09,880 --> 00:08:12,200 Speaker 4: the running. So I was on a zoom with branch 170 00:08:12,240 --> 00:08:15,520 Speaker 4: managers yesterday from the Northeast where I grew up, and 171 00:08:16,120 --> 00:08:18,040 Speaker 4: some of those branch managers were there for thirty years, 172 00:08:18,040 --> 00:08:19,800 Speaker 4: thirty five years, and we say they're very long in 173 00:08:19,840 --> 00:08:21,760 Speaker 4: the tooth in this business. They get it. They've been 174 00:08:21,800 --> 00:08:24,240 Speaker 4: through all the trials and tribulations, they've run the business 175 00:08:24,240 --> 00:08:26,920 Speaker 4: in good times and bad times, et cetera. I'm learning 176 00:08:26,920 --> 00:08:28,400 Speaker 4: from them, so we're going to modify it. But let 177 00:08:28,440 --> 00:08:30,360 Speaker 4: me ask you a question. So when we go into 178 00:08:30,360 --> 00:08:32,640 Speaker 4: a company, so, how did we double the profits of Conway? 179 00:08:32,880 --> 00:08:35,880 Speaker 4: How do we double the profits at Norbear? It starts 180 00:08:35,880 --> 00:08:40,280 Speaker 4: with the people. It starts with creating an atmosphere, a culture, 181 00:08:40,400 --> 00:08:45,200 Speaker 4: a vibe in the organization where people genuinely, sincerely feel 182 00:08:45,240 --> 00:08:48,320 Speaker 4: their value, they're respected, they're part of it, they're an 183 00:08:48,360 --> 00:08:51,240 Speaker 4: important part of it, and they're an essential part of it. 184 00:08:51,640 --> 00:08:55,720 Speaker 4: And that there's feedback loops. There's two way communication between 185 00:08:56,080 --> 00:08:59,240 Speaker 4: us and every part of the organization. So we're very 186 00:08:59,640 --> 00:09:02,760 Speaker 4: highly self aware organization. That's very critical. That's really the 187 00:09:02,800 --> 00:09:06,480 Speaker 4: first step. The second step is figuring out okay, So 188 00:09:06,520 --> 00:09:09,240 Speaker 4: like Beaking, for example, has a little over eight thousand 189 00:09:09,280 --> 00:09:12,560 Speaker 4: employees who wants to stay so well, Annette will get 190 00:09:12,600 --> 00:09:14,680 Speaker 4: all this input from everybody from all the town halls 191 00:09:14,679 --> 00:09:17,120 Speaker 4: and the zooms and the surveys, and then we'll give 192 00:09:17,160 --> 00:09:19,280 Speaker 4: a first iteration of what we heard and what we 193 00:09:19,360 --> 00:09:22,040 Speaker 4: think we should do to double the profits of the company, 194 00:09:22,440 --> 00:09:25,160 Speaker 4: and then we'll get more feedback and we'll get more iteration, 195 00:09:25,240 --> 00:09:27,400 Speaker 4: and then we'll have a final, final plan that'll be 196 00:09:27,400 --> 00:09:30,200 Speaker 4: the plan. Then we ask everybody, are you on board? 197 00:09:30,440 --> 00:09:32,000 Speaker 4: Do you like the plan? Is this something you have 198 00:09:32,000 --> 00:09:34,120 Speaker 4: your heart into. Is this something you want to spend 199 00:09:34,240 --> 00:09:36,400 Speaker 4: your next many years of your life doing. Is this 200 00:09:36,440 --> 00:09:40,000 Speaker 4: something that gets you inspired and motivated and uplifted and engaged. 201 00:09:40,040 --> 00:09:41,920 Speaker 4: And if so, come out on the pool. Let's join 202 00:09:42,000 --> 00:09:43,679 Speaker 4: the party. And if it's something like you know, I 203 00:09:43,720 --> 00:09:45,520 Speaker 4: don't want to be part of a high performance culture. 204 00:09:45,600 --> 00:09:47,320 Speaker 4: I don't want to move that fast, well. 205 00:09:47,200 --> 00:09:49,560 Speaker 3: Then you know it sounds like you have an intuition 206 00:09:49,720 --> 00:09:52,800 Speaker 3: that the business could run as well as it is 207 00:09:52,800 --> 00:09:54,840 Speaker 3: without as many employees as it has. 208 00:09:55,160 --> 00:09:56,120 Speaker 4: Well, I don't know that yet. 209 00:09:56,240 --> 00:09:58,480 Speaker 3: I mean it sounds like that's sort of what's implies. 210 00:09:58,840 --> 00:10:01,040 Speaker 3: I never want to he really wants to stay. 211 00:10:01,280 --> 00:10:03,480 Speaker 4: No, no, no, I want to be clear about this. 212 00:10:04,160 --> 00:10:06,439 Speaker 4: It's a mistake for me if I would go into 213 00:10:06,520 --> 00:10:09,720 Speaker 4: a company that I bought with final conclusions before I 214 00:10:09,760 --> 00:10:13,520 Speaker 4: have the information. And most of the time you can 215 00:10:13,640 --> 00:10:16,760 Speaker 4: pair back the headcount mostly in the mid and upper 216 00:10:16,920 --> 00:10:19,560 Speaker 4: not in the field. The field often is understaffed because 217 00:10:19,600 --> 00:10:22,320 Speaker 4: companies do these rifts, they do these reductions in force, 218 00:10:22,360 --> 00:10:25,840 Speaker 4: which basically is a HR speak for firing people, and 219 00:10:26,200 --> 00:10:28,960 Speaker 4: they bear the brunt of the cutbacks. And sometimes you 220 00:10:28,960 --> 00:10:31,360 Speaker 4: have to actually add people. You don't have enough salespeople, 221 00:10:31,720 --> 00:10:34,079 Speaker 4: you don't have enough drivers, you don't have enough of 222 00:10:34,280 --> 00:10:37,360 Speaker 4: basic functions. But we're not a private equity firm that 223 00:10:37,440 --> 00:10:40,040 Speaker 4: goes in and just slashes and burns to try to 224 00:10:40,080 --> 00:10:42,719 Speaker 4: get short term profit improvement, because that doesn't work, that's 225 00:10:42,760 --> 00:10:45,760 Speaker 4: not sustainable long term. There'll be places where we need 226 00:10:45,800 --> 00:10:48,040 Speaker 4: to add, there'll be places we need to subtract, and 227 00:10:48,120 --> 00:10:52,720 Speaker 4: we will look. We will do a zero based, blank 228 00:10:52,760 --> 00:10:56,520 Speaker 4: slate analysis of every single position, every single person, every 229 00:10:56,520 --> 00:11:01,080 Speaker 4: single function, to say, is this a headcount that we 230 00:11:01,160 --> 00:11:03,560 Speaker 4: must have, Like we need safety people, like, you can't 231 00:11:03,559 --> 00:11:07,000 Speaker 4: cut back safety people. Is this you need a branch manager? 232 00:11:07,000 --> 00:11:09,080 Speaker 4: They have six hundred branches almost, so they need six 233 00:11:09,200 --> 00:11:13,200 Speaker 4: hundred branch managers. You can't reduce branch managers. So or 234 00:11:13,240 --> 00:11:15,480 Speaker 4: is this something that's a nice to have, so then 235 00:11:15,520 --> 00:11:18,360 Speaker 4: you know, if we have some big extra profits, maybe 236 00:11:18,360 --> 00:11:20,720 Speaker 4: we can have this. But and then the third category 237 00:11:20,800 --> 00:11:24,080 Speaker 4: is like we really don't need this. Somehow Goold got 238 00:11:24,120 --> 00:11:27,600 Speaker 4: into the organization really doesn't belong there. And then we'll 239 00:11:27,600 --> 00:11:30,320 Speaker 4: modify the organization structure. Now I don't know. I really 240 00:11:30,400 --> 00:11:34,000 Speaker 4: don't know whether that'll be a radical restructuring or a 241 00:11:34,080 --> 00:11:36,800 Speaker 4: minor restructuring almost nothing. I don't know yet. We got 242 00:11:36,800 --> 00:11:39,960 Speaker 4: to get into it. We've been outside in until last Thursday. 243 00:11:40,160 --> 00:11:42,720 Speaker 4: But we'll find out. So they answer you your earlier question. 244 00:11:43,040 --> 00:11:45,480 Speaker 4: So people is the first thing. We figure out what 245 00:11:45,559 --> 00:11:47,240 Speaker 4: is the plan? Who wants to be part of this? 246 00:11:47,960 --> 00:11:51,400 Speaker 4: Then we figure out, okay, what are the levers, what 247 00:11:51,440 --> 00:11:54,079 Speaker 4: are the steps, what are the things we got to 248 00:11:54,200 --> 00:11:57,160 Speaker 4: do in order to double the profits? And then who's 249 00:11:57,200 --> 00:11:59,720 Speaker 4: going to be in charge of what? And then we 250 00:11:59,760 --> 00:12:03,920 Speaker 4: take the compensation programs and we align the incentives to 251 00:12:04,000 --> 00:12:07,720 Speaker 4: achieving those metrics for very objective, very concrete things, so 252 00:12:07,760 --> 00:12:10,840 Speaker 4: that once we know the plan and we know the levers, 253 00:12:11,520 --> 00:12:15,600 Speaker 4: we can attach owners to different levers and pay them 254 00:12:15,679 --> 00:12:18,640 Speaker 4: if they succeed. This is the most satisfying thing to 255 00:12:18,679 --> 00:12:20,760 Speaker 4: be paying huge bonuses because the only way you're paying 256 00:12:20,800 --> 00:12:23,640 Speaker 4: those huge bonuses is if you're succeeding. So that's what 257 00:12:23,679 --> 00:12:25,679 Speaker 4: we're trying to do. We're trying to win. So the 258 00:12:25,720 --> 00:12:28,400 Speaker 4: first step is all this people's stuff, all the people's stuff. 259 00:12:28,880 --> 00:12:31,600 Speaker 4: The second step is the actual blood and guts of 260 00:12:31,600 --> 00:12:35,520 Speaker 4: the business. So we're a distributor. Beacon is in the 261 00:12:35,520 --> 00:12:40,360 Speaker 4: middle between a manufacturer who makes shingles and other building products, 262 00:12:40,679 --> 00:12:43,240 Speaker 4: and on the other side the general contractors and the 263 00:12:43,280 --> 00:12:46,280 Speaker 4: home builders who buy these things. So when you just 264 00:12:46,320 --> 00:12:48,520 Speaker 4: step back and look at the business model, it's a 265 00:12:48,520 --> 00:12:51,040 Speaker 4: pretty simple supply chain. So what do you have to do. 266 00:12:51,520 --> 00:12:53,640 Speaker 4: You have to figure out a way that you can 267 00:12:53,800 --> 00:12:56,960 Speaker 4: optimize your procurement. You have to go to your vendors 268 00:12:57,320 --> 00:13:00,440 Speaker 4: and say you can't just go to your vendors and say, hey, 269 00:13:00,440 --> 00:13:02,280 Speaker 4: give me exp percent discount. They're going to say, well, 270 00:13:02,360 --> 00:13:03,920 Speaker 4: like why, like why should they give you better tothing? 271 00:13:03,960 --> 00:13:07,240 Speaker 4: So you have to really understand what would they value, 272 00:13:07,280 --> 00:13:10,880 Speaker 4: what would the OEMs, the original equipment manufacturers, what would 273 00:13:10,880 --> 00:13:13,400 Speaker 4: they appreciate, and what would help them save money so 274 00:13:13,840 --> 00:13:16,320 Speaker 4: you earn a lower price, you get a bigger rebate. 275 00:13:16,760 --> 00:13:19,800 Speaker 4: And so for instance, United Rentals when it bought United Rentals, 276 00:13:19,880 --> 00:13:22,400 Speaker 4: we started buying hundreds of companies. We went to the 277 00:13:22,840 --> 00:13:26,040 Speaker 4: manufacturers of the skid steers and the generators and white 278 00:13:26,040 --> 00:13:28,000 Speaker 4: towers and so forth, and we said, what do we 279 00:13:28,040 --> 00:13:29,640 Speaker 4: got to do to get big discounts on the price, 280 00:13:29,679 --> 00:13:31,719 Speaker 4: because we really want you know, we're bigger. How can 281 00:13:31,720 --> 00:13:34,079 Speaker 4: we get a bigger discount? And they said, well, one 282 00:13:34,080 --> 00:13:36,280 Speaker 4: thing you could do is you could consolidate your vendor 283 00:13:36,320 --> 00:13:39,120 Speaker 4: base so that you know, you have bigger orders with us. 284 00:13:39,520 --> 00:13:41,480 Speaker 4: And the other thing you could do is you give 285 00:13:41,559 --> 00:13:43,360 Speaker 4: us more advanced notice that we can plan more because 286 00:13:43,360 --> 00:13:45,600 Speaker 4: that would save them cost. And so we said, good, 287 00:13:45,720 --> 00:13:48,640 Speaker 4: that's a great partnership. We reduced all those vendors, so 288 00:13:48,640 --> 00:13:51,640 Speaker 4: for instance, area lifts and booms, the scissors, we reduced 289 00:13:51,640 --> 00:13:54,600 Speaker 4: it down to two Genie and JLG. I think they're 290 00:13:54,640 --> 00:13:57,160 Speaker 4: still the only two main vendors for aeral listing, not 291 00:13:57,240 --> 00:13:59,719 Speaker 4: of rentals twenty something years later. So we got big 292 00:13:59,720 --> 00:14:02,440 Speaker 4: discs counts and the manufacturers like, do this. We're gonna 293 00:14:02,440 --> 00:14:04,640 Speaker 4: have to do a similar process with the manufacturers here. 294 00:14:04,679 --> 00:14:06,400 Speaker 4: And then you have on the other end of the 295 00:14:06,480 --> 00:14:10,760 Speaker 4: equation selling. So we're selling all those to customers. Are 296 00:14:10,800 --> 00:14:14,640 Speaker 4: we pricing them right? Are we pricing it methodically scientifically? 297 00:14:15,040 --> 00:14:17,559 Speaker 4: Are we using algorithms? Are we using technology to figure 298 00:14:17,559 --> 00:14:21,000 Speaker 4: out elasticity to figure out if we raise pricing, this 299 00:14:21,080 --> 00:14:23,000 Speaker 4: is how much business will lose, but this is what 300 00:14:23,040 --> 00:14:25,280 Speaker 4: we'll do to profit. If we lower pricing, this is 301 00:14:25,320 --> 00:14:26,840 Speaker 4: how much we will increase volume with. This is due 302 00:14:26,880 --> 00:14:29,360 Speaker 4: to profit and so forth. And the third category of 303 00:14:29,360 --> 00:14:32,000 Speaker 4: stuff to do, Joe is everything in the middle. Making 304 00:14:32,000 --> 00:14:35,640 Speaker 4: sure our cost structure is appropriate, not too lean, but 305 00:14:35,720 --> 00:14:36,360 Speaker 4: not excessive. 306 00:14:52,520 --> 00:14:54,760 Speaker 2: You know, I mentioned in the intro that it's been 307 00:14:55,040 --> 00:14:57,880 Speaker 2: relatively quiet for M and A and deals so far 308 00:14:57,920 --> 00:15:01,320 Speaker 2: this year. I think volumes are act up slightly, but 309 00:15:01,560 --> 00:15:04,880 Speaker 2: certainly we have not seen the deal boom that a 310 00:15:04,880 --> 00:15:08,760 Speaker 2: lot of people were expecting with the new administration. When 311 00:15:08,760 --> 00:15:11,880 Speaker 2: you announced your deal, you said you already have antitrust 312 00:15:12,000 --> 00:15:15,480 Speaker 2: clearance from both the US and Canada. I'm curious what's 313 00:15:15,560 --> 00:15:20,080 Speaker 2: the general vibe from this administration when it comes to 314 00:15:20,160 --> 00:15:24,400 Speaker 2: deal making versus previous administrations. I know you have a 315 00:15:24,520 --> 00:15:27,760 Speaker 2: very very long history of doing deals and you've seen 316 00:15:27,960 --> 00:15:31,320 Speaker 2: lots of different administrations come and go. What was it 317 00:15:31,440 --> 00:15:32,680 Speaker 2: like this time around. 318 00:15:32,840 --> 00:15:34,840 Speaker 4: My teams and I have done over five hundred acquisitions. 319 00:15:34,840 --> 00:15:37,960 Speaker 4: We've never had one deal blocked. We've had a deal 320 00:15:38,000 --> 00:15:40,480 Speaker 4: here there with regulars. They why don't you promise not 321 00:15:40,520 --> 00:15:43,200 Speaker 4: to raise pricing on this category of customer, or we 322 00:15:43,200 --> 00:15:45,320 Speaker 4: can you divest this little part of the business. But 323 00:15:45,360 --> 00:15:47,960 Speaker 4: generally speaking, we haven't had a problem with that here. 324 00:15:48,400 --> 00:15:50,680 Speaker 4: It was very easy to get anti trust clearance. And 325 00:15:50,680 --> 00:15:52,640 Speaker 4: by the way, it was with the previous administration that 326 00:15:53,400 --> 00:15:56,480 Speaker 4: because we don't have any we don't have any existing distributor, 327 00:15:56,520 --> 00:15:58,520 Speaker 4: so it's not like we had a bit we had 328 00:15:58,560 --> 00:16:01,080 Speaker 4: a roofing distributor and buying a roof and distributor, and 329 00:16:01,120 --> 00:16:02,600 Speaker 4: now we're going to get twice the markets here in 330 00:16:02,600 --> 00:16:04,360 Speaker 4: the market where we're entering it for the first time. 331 00:16:04,640 --> 00:16:06,800 Speaker 4: So there really weren't any antitrust considerations. 332 00:16:07,240 --> 00:16:10,320 Speaker 3: What is it about the nature of roofing supplies such 333 00:16:10,440 --> 00:16:12,920 Speaker 3: that they're still domestically made. It seems pretty good that 334 00:16:12,920 --> 00:16:15,520 Speaker 3: you're entering a business in which tariff risk isn't going 335 00:16:15,600 --> 00:16:18,760 Speaker 3: to be much of a risk factor for the business. 336 00:16:19,120 --> 00:16:22,760 Speaker 3: Why are roofing supplies still in twenty twenty five more 337 00:16:22,880 --> 00:16:24,800 Speaker 3: or less built where they're used? 338 00:16:25,200 --> 00:16:26,800 Speaker 4: You know, it's just the way it worked out. It 339 00:16:26,880 --> 00:16:29,720 Speaker 4: worked out over time that American manufacturers figured out a 340 00:16:29,720 --> 00:16:34,040 Speaker 4: way even though we have higher labor costs than overseas 341 00:16:34,080 --> 00:16:38,040 Speaker 4: countries to produce singles that the American consumer wanted, which 342 00:16:38,080 --> 00:16:40,000 Speaker 4: is a little bit different. You go country to country 343 00:16:40,000 --> 00:16:42,240 Speaker 4: in Europe, even they have different specs for the shingles. 344 00:16:42,360 --> 00:16:44,160 Speaker 4: You go in Age, they have different specs because there's 345 00:16:44,160 --> 00:16:48,400 Speaker 4: different environments, there's different climates, there's different cultural there's different appearances, 346 00:16:48,440 --> 00:16:51,480 Speaker 4: there's different colors and textures and so forth. And American 347 00:16:51,560 --> 00:16:54,400 Speaker 4: manufacturers did a real good job at that. Now maybe 348 00:16:54,400 --> 00:16:56,160 Speaker 4: that's a good model. Maybe that's a good model for 349 00:16:56,200 --> 00:16:59,840 Speaker 4: other manufacturing that went overseas over the last few decades 350 00:16:59,840 --> 00:17:03,120 Speaker 4: that maybe those manufacturers need up their game and figure 351 00:17:03,120 --> 00:17:05,920 Speaker 4: out what is it that's our specially, what's our strength. 352 00:17:06,200 --> 00:17:08,720 Speaker 4: What is it that even with higher labor costs here 353 00:17:08,760 --> 00:17:11,120 Speaker 4: in the United States, we can please the customer more. 354 00:17:11,440 --> 00:17:14,160 Speaker 4: And the other advantage of American manufacturers selling in America 355 00:17:14,240 --> 00:17:17,040 Speaker 4: is you don't have all this transportation costs. It costs 356 00:17:17,080 --> 00:17:19,760 Speaker 4: a lot of money to move goods thousands of thousands 357 00:17:19,800 --> 00:17:22,520 Speaker 4: of miles, and you also have shorter lead times because 358 00:17:22,560 --> 00:17:26,400 Speaker 4: you're right here. So I actually am bullish about American manufacturing. 359 00:17:26,720 --> 00:17:30,200 Speaker 4: I think American manufacturing fast forward five years from now, 360 00:17:30,359 --> 00:17:31,880 Speaker 4: ten years from I think it's been a lot more 361 00:17:32,040 --> 00:17:32,800 Speaker 4: here on shore. 362 00:17:33,680 --> 00:17:37,439 Speaker 2: Your initial takeover target, though, was a company called Rexul, 363 00:17:37,480 --> 00:17:41,720 Speaker 2: which I think is a French electric equipment supplier. Is 364 00:17:41,760 --> 00:17:45,080 Speaker 2: that right, okay? And they said no, they rejected you, 365 00:17:45,720 --> 00:17:49,040 Speaker 2: and you've moved on pretty quickly. Why did you change 366 00:17:49,040 --> 00:17:51,119 Speaker 2: your minds on that one? Is it the case that 367 00:17:51,359 --> 00:17:54,159 Speaker 2: French companies are harder to buy than American ones or 368 00:17:54,200 --> 00:17:57,320 Speaker 2: are you worried perhaps about how tariffs would impact that 369 00:17:57,440 --> 00:17:59,159 Speaker 2: business versus something like roofing. 370 00:18:00,080 --> 00:18:02,520 Speaker 4: Well, we never confirmed that we were talking to that 371 00:18:02,560 --> 00:18:10,679 Speaker 4: company publicly. Somehow some reporter got that through journalism. But 372 00:18:11,160 --> 00:18:14,280 Speaker 4: when we were reportedly looking at that French based company, 373 00:18:14,280 --> 00:18:16,720 Speaker 4: which has a lot of its biggest countries the United States. Actions, 374 00:18:16,760 --> 00:18:18,840 Speaker 4: when we were looking at that, we're reportedly looking at that. 375 00:18:19,560 --> 00:18:21,959 Speaker 4: This was still in the previous administration. There wasn't tariffs 376 00:18:22,200 --> 00:18:25,400 Speaker 4: wasn't really in the air, So it really wasn't about terriffs. 377 00:18:25,520 --> 00:18:28,600 Speaker 4: It wasn't that some other company was not good. The 378 00:18:28,600 --> 00:18:31,639 Speaker 4: company mentions actually a really good company and has great prospects. 379 00:18:32,040 --> 00:18:34,639 Speaker 4: But Beacon was perfect for us. I mean, Beacon is 380 00:18:34,680 --> 00:18:37,720 Speaker 4: absolutely perfect for our particular skill set, the kind of 381 00:18:37,720 --> 00:18:40,640 Speaker 4: things we do to increase the profits of a company. 382 00:18:41,080 --> 00:18:43,720 Speaker 4: This applies to Beacon, which is why I did, which 383 00:18:43,760 --> 00:18:45,600 Speaker 4: I is something I've only done once before in my 384 00:18:45,640 --> 00:18:47,879 Speaker 4: life out of more than five hundred acquisitions, which is 385 00:18:48,480 --> 00:18:52,040 Speaker 4: I did an unsolicited a takeover. We proposed an alternative slate, 386 00:18:52,119 --> 00:18:54,720 Speaker 4: and we did a proxy solicitation, and it was because 387 00:18:54,800 --> 00:18:56,840 Speaker 4: it was such a good match. It was a match 388 00:18:56,880 --> 00:18:59,200 Speaker 4: made in heaven that we should just not run away from. 389 00:18:59,680 --> 00:19:03,400 Speaker 2: Yes, speaking of this, so you raised your offer right 390 00:19:03,480 --> 00:19:06,600 Speaker 2: after the initial rejection. And right now I am looking 391 00:19:06,720 --> 00:19:10,560 Speaker 2: at a chart of shares of a company called James Hardy. 392 00:19:10,960 --> 00:19:14,080 Speaker 2: It's an Australian company and they just announced that they 393 00:19:14,119 --> 00:19:19,760 Speaker 2: were buying something and their stock has tanked because people 394 00:19:19,800 --> 00:19:22,679 Speaker 2: are worried that they've overpaid for a US asset in 395 00:19:22,720 --> 00:19:25,480 Speaker 2: the current environment. Do you worry at all that you've 396 00:19:25,520 --> 00:19:29,159 Speaker 2: overpaid after adding on you know, pretty decent premium. 397 00:19:29,600 --> 00:19:31,639 Speaker 4: Well, I'm not in the reads that deal because that's 398 00:19:31,640 --> 00:19:33,680 Speaker 4: the manufacturers and I'll follow it as closely, but from 399 00:19:33,720 --> 00:19:35,800 Speaker 4: what I've read, it looks like they paid something like 400 00:19:35,880 --> 00:19:39,040 Speaker 4: nineteen times ibadah and we paid ten and a half 401 00:19:39,040 --> 00:19:42,320 Speaker 4: times eb DA. So if you pay very high multiples 402 00:19:42,320 --> 00:19:45,439 Speaker 4: for companies, you know that affects yourholder value. Now I'm 403 00:19:45,520 --> 00:19:47,560 Speaker 4: not condemning that deal because I'm not knowledge enough to 404 00:19:47,600 --> 00:19:51,480 Speaker 4: condemn it, but generally speaking, the price you pay matters. 405 00:19:51,720 --> 00:19:56,320 Speaker 4: It matters a lot because the ROIC return on investing 406 00:19:56,400 --> 00:20:00,240 Speaker 4: capital for acquisitions, the IC is the purchase price, and 407 00:20:00,240 --> 00:20:02,720 Speaker 4: if you have a high purchase price, that lowers the 408 00:20:02,880 --> 00:20:06,160 Speaker 4: ROI C. Your stock price is a function of your 409 00:20:06,160 --> 00:20:09,080 Speaker 4: return on capital. Investors give you money debt and equity. 410 00:20:09,119 --> 00:20:11,080 Speaker 4: Now you got to get a return on that. And 411 00:20:11,160 --> 00:20:13,800 Speaker 4: if you overpay for acquisitions, and I'm not saying they 412 00:20:13,800 --> 00:20:15,600 Speaker 4: did because I don't know enough about it, but if 413 00:20:15,600 --> 00:20:19,040 Speaker 4: you're perceived to be overpaying, then you know your stock's 414 00:20:19,080 --> 00:20:19,720 Speaker 4: going to go down. 415 00:20:19,800 --> 00:20:22,480 Speaker 2: You're comfortable with the forty percent premium that you paid. 416 00:20:22,720 --> 00:20:25,080 Speaker 4: I love the price we paid. I think the price 417 00:20:25,080 --> 00:20:27,880 Speaker 4: we paid is a is a fair price. It's it's 418 00:20:27,880 --> 00:20:30,119 Speaker 4: not a terribly low price, but it's certainly not a 419 00:20:30,160 --> 00:20:32,160 Speaker 4: high price. And this is a price that when you're 420 00:20:32,160 --> 00:20:35,160 Speaker 4: paying ten and a half times ebitdah, and that's before 421 00:20:35,160 --> 00:20:37,199 Speaker 4: you double the ebadah, you know you're paying, like you know, 422 00:20:37,359 --> 00:20:40,199 Speaker 4: mid single digits ebudah for a nice business that's growing, 423 00:20:40,400 --> 00:20:43,000 Speaker 4: it's got long term growth to it. That eighty percent 424 00:20:43,000 --> 00:20:45,919 Speaker 4: of it is nondiscretionary, that's terriff im unit and is 425 00:20:46,080 --> 00:20:49,119 Speaker 4: the main reason why out of the fifty five different 426 00:20:49,119 --> 00:20:52,800 Speaker 4: industries we looked at, we pick building products distribution, which 427 00:20:52,880 --> 00:20:55,679 Speaker 4: is this is an industry that's got growth to it 428 00:20:55,800 --> 00:20:59,480 Speaker 4: because there's a shortage of something like four million homes 429 00:20:59,520 --> 00:21:02,159 Speaker 4: in the United Sates States. That's a big shortage, and 430 00:21:02,200 --> 00:21:04,159 Speaker 4: it's one of the few things that both Democrats and 431 00:21:04,200 --> 00:21:07,879 Speaker 4: Republicans completely agree on that we need to solve this 432 00:21:07,920 --> 00:21:10,040 Speaker 4: housing crisis. This housing shortage has to be sold, so 433 00:21:10,040 --> 00:21:12,480 Speaker 4: there's going to be more construction. It'll be cyclical, but 434 00:21:12,760 --> 00:21:15,120 Speaker 4: over the long term arc is going to be more 435 00:21:15,160 --> 00:21:18,520 Speaker 4: and more bildy. And then they're old. They're old. There's 436 00:21:18,600 --> 00:21:21,719 Speaker 4: forty million homes that are over forty years old. By 437 00:21:21,720 --> 00:21:23,439 Speaker 4: the way, they're all going to need to change their roofs. 438 00:21:23,680 --> 00:21:28,119 Speaker 4: They're all what's called prospective customers for this business. So 439 00:21:28,320 --> 00:21:32,040 Speaker 4: it's exposed to growth just for showing up and being 440 00:21:32,080 --> 00:21:35,240 Speaker 4: in the game. And that's a good thing because you 441 00:21:35,280 --> 00:21:38,120 Speaker 4: can do a thousand things right, but if the underlying 442 00:21:38,200 --> 00:21:40,920 Speaker 4: trend is in your faces, coming the wrong way. It's 443 00:21:41,000 --> 00:21:42,080 Speaker 4: tough Joe. 444 00:21:42,119 --> 00:21:45,400 Speaker 2: As proof of concept of Brad's business plan, I took 445 00:21:45,440 --> 00:21:47,960 Speaker 2: delivery yesterday, my husband and I of a bunch of 446 00:21:48,000 --> 00:21:51,520 Speaker 2: roof shingles always love. Update was, Yeah, there we go 447 00:21:51,680 --> 00:21:55,119 Speaker 2: because our insurance company says we have to replace the 448 00:21:55,200 --> 00:21:58,640 Speaker 2: roof on our barn. So literally, you know, we have 449 00:21:58,680 --> 00:22:01,280 Speaker 2: to have roofs and we have to do what the 450 00:22:01,280 --> 00:22:02,440 Speaker 2: insurance company says. 451 00:22:02,800 --> 00:22:07,040 Speaker 3: You're welcome, Brad. You've made your career sort of doing 452 00:22:07,080 --> 00:22:10,760 Speaker 3: the deals like this, one after another sequentially, and unfortunately 453 00:22:11,520 --> 00:22:14,399 Speaker 3: time is linear and scarce, and we only live ones. 454 00:22:14,760 --> 00:22:17,200 Speaker 3: If you could clone yourself and there were one hundred, 455 00:22:17,240 --> 00:22:20,760 Speaker 3: Brad Jacob, are there a lot more deals like this 456 00:22:20,880 --> 00:22:23,560 Speaker 3: sitting out there that the only reason you're not doing 457 00:22:23,560 --> 00:22:26,040 Speaker 3: them is because unfortunately we only have so much time. 458 00:22:26,119 --> 00:22:29,080 Speaker 3: And the reason I partly ask this is because there 459 00:22:29,119 --> 00:22:33,480 Speaker 3: are a lot of people in recent years x MBA's 460 00:22:34,040 --> 00:22:36,480 Speaker 3: people who have told this story that there's tons of 461 00:22:36,480 --> 00:22:39,760 Speaker 3: businesses out there that aren't being run at their maximal 462 00:22:39,960 --> 00:22:43,160 Speaker 3: operational performance, some of the very small level. 463 00:22:43,240 --> 00:22:44,720 Speaker 4: Go buy a pool. 464 00:22:44,480 --> 00:22:46,639 Speaker 3: Cleaning company and then roll it up into ten and 465 00:22:46,680 --> 00:22:48,840 Speaker 3: then you can make it better and make a bunch 466 00:22:48,880 --> 00:22:52,600 Speaker 3: of money or an HVAC company, whatever. How much opportunity 467 00:22:52,720 --> 00:22:56,359 Speaker 3: is there if time for you weren't a scarce asset. 468 00:22:56,640 --> 00:22:58,800 Speaker 4: So, first of all, that's a scary thought one hundred 469 00:22:58,800 --> 00:23:02,560 Speaker 4: brad Jacks. But the answer your question is yes, and 470 00:23:02,680 --> 00:23:06,400 Speaker 4: note yes, there's tons of opportunities of going into companies 471 00:23:06,560 --> 00:23:10,320 Speaker 4: and significantly improving the profitability of them. But no, in 472 00:23:10,359 --> 00:23:11,639 Speaker 4: the sense that there's not a lot of people can 473 00:23:11,680 --> 00:23:13,399 Speaker 4: do that. I'm not the only guy. I can do that. 474 00:23:13,560 --> 00:23:15,719 Speaker 4: Ed Breeden can do this, Larry Kolp can do this, 475 00:23:16,160 --> 00:23:19,160 Speaker 4: Dave Cody can do this. There's a bunch of executives 476 00:23:19,160 --> 00:23:22,639 Speaker 4: who've come out of academy trained organizations. 477 00:23:22,040 --> 00:23:24,120 Speaker 3: Like like for guess if there are one hundred Bridge Inos, 478 00:23:24,160 --> 00:23:26,240 Speaker 3: they don't be competing and each other and that would 479 00:23:26,320 --> 00:23:28,800 Speaker 3: drive up the price of Beacon roofing even further. 480 00:23:28,880 --> 00:23:29,960 Speaker 4: Anyway, we'll stick with one. 481 00:23:30,080 --> 00:23:33,399 Speaker 2: Okay, yeah, Well, are you done on the deal making 482 00:23:33,480 --> 00:23:36,359 Speaker 2: front or is this going to be busy for a while? 483 00:23:36,440 --> 00:23:38,640 Speaker 4: Traces is the first one. Yeah, we're going to build 484 00:23:38,680 --> 00:23:40,960 Speaker 4: a fifty billion dollar company over the next five or 485 00:23:41,000 --> 00:23:41,600 Speaker 4: six years. 486 00:23:41,760 --> 00:23:43,400 Speaker 2: Well, this is how quickly though? 487 00:23:43,640 --> 00:23:43,840 Speaker 4: Like this? 488 00:23:43,920 --> 00:23:46,200 Speaker 2: Are you looking already. 489 00:23:45,720 --> 00:23:47,920 Speaker 4: Absolutely I have a deal team we're looking at and 490 00:23:48,000 --> 00:23:50,680 Speaker 4: we're talking and we haven't even acquired yet. But even 491 00:23:50,720 --> 00:23:52,920 Speaker 4: as we're about to acquire Beacon and we're focusing on 492 00:23:52,960 --> 00:23:55,760 Speaker 4: the integration and optimization, we're still looking at other deals. 493 00:23:56,040 --> 00:23:58,160 Speaker 4: We have tons of capacity to do that. I don't 494 00:23:58,200 --> 00:24:00,320 Speaker 4: like to do like five deals at a time, five 495 00:24:00,320 --> 00:24:03,240 Speaker 4: big deals, but I actually like doing a couple deals 496 00:24:03,280 --> 00:24:05,879 Speaker 4: at a time because then you do one reorganization and 497 00:24:05,880 --> 00:24:07,600 Speaker 4: then you pause for a year year and a half 498 00:24:07,640 --> 00:24:10,639 Speaker 4: while you're integrating and optimizing. You don't have to like 499 00:24:10,720 --> 00:24:12,159 Speaker 4: start and stop. So I kind of like doing that. 500 00:24:12,200 --> 00:24:13,840 Speaker 4: But when you look at M and A, M and 501 00:24:13,920 --> 00:24:15,760 Speaker 4: A is gonna be a big driver for our growth here. 502 00:24:16,000 --> 00:24:19,920 Speaker 4: That's in our DNA. So ten billion with Beacon gets 503 00:24:19,960 --> 00:24:21,840 Speaker 4: us one fifth of where we're going to be. So 504 00:24:21,920 --> 00:24:23,959 Speaker 4: it's a good start, but it's really just to start. 505 00:24:24,840 --> 00:24:28,000 Speaker 4: The acquisitions that Beacon have been doing are these relatively 506 00:24:28,040 --> 00:24:30,560 Speaker 4: smaller ones, and you know they do like a dozen 507 00:24:30,840 --> 00:24:33,280 Speaker 4: fifteen a year. And I met with the head of 508 00:24:33,280 --> 00:24:34,960 Speaker 4: the M and A, the nice guy, and I asked 509 00:24:35,000 --> 00:24:37,280 Speaker 4: him my challenge him. I said, what's holding you back 510 00:24:37,280 --> 00:24:39,480 Speaker 4: from doing two or three times that? He said, really 511 00:24:39,520 --> 00:24:42,239 Speaker 4: nothing just hasn't been our goal. You just need a 512 00:24:42,280 --> 00:24:43,920 Speaker 4: couple more people, and you know we can get going. 513 00:24:44,000 --> 00:24:45,879 Speaker 4: We have the backlog, we have the relationships, we have 514 00:24:45,920 --> 00:24:49,520 Speaker 4: the network. We have to know how. So I said, okay, well, 515 00:24:49,520 --> 00:24:50,719 Speaker 4: I think we're going to do that, and we need 516 00:24:50,760 --> 00:24:52,439 Speaker 4: to get more input and get more feedback where we 517 00:24:52,520 --> 00:24:55,360 Speaker 4: just impulsively say, you know, triple amount of acquisitions you're doing. 518 00:24:55,520 --> 00:24:57,159 Speaker 4: But I think that's pretty likely we're going to come 519 00:24:57,200 --> 00:25:00,080 Speaker 4: out saying let's do more. Let's increase the pace of 520 00:25:00,119 --> 00:25:03,560 Speaker 4: these small tucking acquisitions because the multiples are very reasonable 521 00:25:03,560 --> 00:25:05,960 Speaker 4: in those small ones and the synergies are really great. 522 00:25:06,359 --> 00:25:09,000 Speaker 4: Then you have not a lot, you got a couple 523 00:25:09,040 --> 00:25:11,720 Speaker 4: of handfuls of medium sized ones, ones that are like 524 00:25:12,320 --> 00:25:14,840 Speaker 4: fifty million of ebit DAH or two hundred and fifty 525 00:25:14,840 --> 00:25:17,400 Speaker 4: million EBITDA or something in between. I want to take 526 00:25:17,400 --> 00:25:18,639 Speaker 4: a real hard look at those. If we can go 527 00:25:18,800 --> 00:25:22,400 Speaker 4: get those at reasonable prices, then they absolutely belong as 528 00:25:22,440 --> 00:25:24,280 Speaker 4: part of us. We want to do that. But then 529 00:25:24,320 --> 00:25:26,199 Speaker 4: we'll look at M and A and other verticals that 530 00:25:26,280 --> 00:25:29,600 Speaker 4: are for the most part related but not roofing, but 531 00:25:29,640 --> 00:25:31,560 Speaker 4: something that's in the same part of the cycle. Of 532 00:25:31,640 --> 00:25:34,920 Speaker 4: the of the building cycle, and we'll do acquisitions there. 533 00:25:34,960 --> 00:25:36,320 Speaker 4: So we're going to do a lot of M and A. 534 00:25:36,680 --> 00:25:40,199 Speaker 4: We're also going to do green fields. So when you 535 00:25:40,320 --> 00:25:42,080 Speaker 4: google me, if you come across a lot of stuff 536 00:25:42,080 --> 00:25:44,200 Speaker 4: about the M and A, like all these stories about 537 00:25:44,400 --> 00:25:46,440 Speaker 4: only five hundred deals in this deal and that deal, 538 00:25:46,440 --> 00:25:48,760 Speaker 4: and this is eleven billion and seven billion and three billion. 539 00:25:49,200 --> 00:25:51,440 Speaker 4: But we really made the money on the green fields. 540 00:25:51,560 --> 00:25:53,600 Speaker 4: Wed we made the money on two things. We made 541 00:25:53,600 --> 00:25:56,280 Speaker 4: the money on improving the profits of the companies we 542 00:25:56,320 --> 00:26:00,960 Speaker 4: bought by sticking to the playbook and doing green fields. 543 00:26:01,080 --> 00:26:03,040 Speaker 4: Green fields by that I mean cold starts just instead 544 00:26:03,080 --> 00:26:06,560 Speaker 4: of buying someone, just renting or buying some leasing or 545 00:26:06,560 --> 00:26:09,280 Speaker 4: buying some space and a building and hiring some people. 546 00:26:09,280 --> 00:26:10,479 Speaker 3: And it's yours from day one. 547 00:26:10,600 --> 00:26:12,240 Speaker 4: It's yours from day one, and you don't have it, 548 00:26:12,280 --> 00:26:14,480 Speaker 4: So go back to the ROI C. Joe. The IC 549 00:26:14,680 --> 00:26:17,480 Speaker 4: is a lot lower. The investor capital in a startup 550 00:26:17,560 --> 00:26:20,080 Speaker 4: is much much lower than paying ten times even DOT 551 00:26:20,119 --> 00:26:22,200 Speaker 4: to buy somebody. So we're gonna we're gonna do those two. 552 00:26:22,240 --> 00:26:24,399 Speaker 4: So we will have M and A in our in 553 00:26:24,440 --> 00:26:26,720 Speaker 4: our game plan, but we're also gonna have these green fields, 554 00:26:26,760 --> 00:26:28,800 Speaker 4: and you look at you're not rentals, for example, you're 555 00:26:28,800 --> 00:26:31,120 Speaker 4: not in rentals. We did two hundred some odd acquisitions. 556 00:26:31,160 --> 00:26:33,600 Speaker 4: We did two hundred some odd green fields. I got 557 00:26:33,640 --> 00:26:35,680 Speaker 4: a ton of press for the M and A. I 558 00:26:35,720 --> 00:26:37,800 Speaker 4: don't think I got one article about the green fields. 559 00:26:37,840 --> 00:26:51,920 Speaker 5: And we made a lot more money on the green fields. 560 00:26:55,200 --> 00:26:57,760 Speaker 3: Can you give us, whether we're talking about deals, a 561 00:26:57,800 --> 00:27:00,560 Speaker 3: little lay of the land about market share? How big 562 00:27:00,800 --> 00:27:03,919 Speaker 3: is the space and how much market share does Beacon 563 00:27:04,040 --> 00:27:06,359 Speaker 3: have and how fragmented is it and so forth. 564 00:27:06,920 --> 00:27:09,159 Speaker 4: It depends how you categoryze, how you count it, but 565 00:27:09,240 --> 00:27:12,040 Speaker 4: generally speaking, somewhere between fifteen and seventy five billion dollars. 566 00:27:12,280 --> 00:27:14,680 Speaker 4: So it's not huge. It's not like a five hundred 567 00:27:14,720 --> 00:27:16,840 Speaker 4: billion dollar TAM or trillion dollar TAM. But it's not 568 00:27:16,880 --> 00:27:17,680 Speaker 4: insignificant either. 569 00:27:18,840 --> 00:27:19,199 Speaker 1: Revenue. 570 00:27:19,720 --> 00:27:22,520 Speaker 4: That's revenue, yes, and then you have Beacon has ten 571 00:27:22,560 --> 00:27:25,040 Speaker 4: billion of that, so somewhere is between you know, fifteen 572 00:27:25,040 --> 00:27:27,640 Speaker 4: twenty percent in that kind of range. There's two other 573 00:27:27,960 --> 00:27:31,320 Speaker 4: actually very good companies, this one called ABC, which is 574 00:27:31,400 --> 00:27:34,440 Speaker 4: run by this was the chaired by this amazing woman 575 00:27:34,480 --> 00:27:36,440 Speaker 4: called Diane Hendrix. W Right had the pleasure of meet 576 00:27:36,440 --> 00:27:38,399 Speaker 4: brief at least proably doesn't remember me at an event 577 00:27:38,440 --> 00:27:40,520 Speaker 4: in Pond Beach that Byer Trot was having a couple 578 00:27:40,560 --> 00:27:42,400 Speaker 4: of years ago. And this is this is a woman 579 00:27:42,440 --> 00:27:44,679 Speaker 4: who's built up an amazing company. When you go to 580 00:27:44,720 --> 00:27:46,560 Speaker 4: the trade shows, and I'm going a few the trade shows. 581 00:27:46,680 --> 00:27:49,080 Speaker 4: They got the hottest booth, a lot of activity, there's 582 00:27:49,080 --> 00:27:51,119 Speaker 4: a lot of energy there and very dynamic. It's very 583 00:27:51,119 --> 00:27:53,320 Speaker 4: self confidence, got it. It looks like a really good 584 00:27:53,320 --> 00:27:56,080 Speaker 4: company from the outside. And then there's another company that 585 00:27:56,440 --> 00:28:01,199 Speaker 4: a very iconic entrepreneur similar to me in a lot 586 00:28:01,240 --> 00:28:05,080 Speaker 4: of different ways, called Dan Tinker built up. It's called SRS. 587 00:28:05,680 --> 00:28:08,919 Speaker 4: And they got backing from Leonard Green and from Berkshire Partners, 588 00:28:08,960 --> 00:28:10,840 Speaker 4: and they built up a real nice company. They sold 589 00:28:10,840 --> 00:28:14,159 Speaker 4: it for fifteen twenty billion dollars to Home Depot, So 590 00:28:14,240 --> 00:28:17,080 Speaker 4: that's part of Home Depot. But that was also a 591 00:28:17,520 --> 00:28:21,480 Speaker 4: spectacular story, I mean a real American success story where 592 00:28:21,520 --> 00:28:26,080 Speaker 4: they had twenty percent organic revenue growth between ten and 593 00:28:26,119 --> 00:28:28,960 Speaker 4: twenty twenty three. I've studied a lot of industries. I've 594 00:28:28,960 --> 00:28:31,040 Speaker 4: been in a lot of industries. I've not seen a 595 00:28:31,080 --> 00:28:33,080 Speaker 4: lot of industries where a company can have twenty percent 596 00:28:33,200 --> 00:28:37,800 Speaker 4: organic revenue growth that is very impressive between price volume 597 00:28:37,960 --> 00:28:42,720 Speaker 4: and green fields, not through acquisitions, organically organic revenue growth 598 00:28:43,000 --> 00:28:44,960 Speaker 4: very very impressive, which is why I got this great 599 00:28:45,000 --> 00:28:46,360 Speaker 4: multiple when he sold it to Home. 600 00:28:46,280 --> 00:28:47,640 Speaker 3: Depot, soa is amazing. 601 00:28:47,920 --> 00:28:52,360 Speaker 4: Those two companies and Beacon together have more than half 602 00:28:52,360 --> 00:28:54,480 Speaker 4: of half of the industry. But then there's these other companies, 603 00:28:54,560 --> 00:28:57,880 Speaker 4: these independence and these smaller companies that are smaller but 604 00:28:58,440 --> 00:29:00,160 Speaker 4: are really strong, feisty companies. 605 00:29:01,080 --> 00:29:03,760 Speaker 2: So people have to have roofs over their heads. As 606 00:29:03,800 --> 00:29:07,840 Speaker 2: we discussed, it's not a discretionary item for most people. 607 00:29:07,920 --> 00:29:10,360 Speaker 2: But at the same time, I imagine if the economy 608 00:29:10,400 --> 00:29:14,720 Speaker 2: slows down, if interest rates are high, then maybe construction 609 00:29:15,000 --> 00:29:19,600 Speaker 2: starts to slow and you see fewer sales of roofing, 610 00:29:19,680 --> 00:29:24,120 Speaker 2: shingles or whatever. Give us your general read on economic 611 00:29:24,200 --> 00:29:27,120 Speaker 2: activity right now? What are you seeing from your perspective, 612 00:29:27,360 --> 00:29:31,040 Speaker 2: as you know, chairman and CEO of QXO, your first acquisition, 613 00:29:31,120 --> 00:29:34,520 Speaker 2: but also taking into account all of your other many 614 00:29:34,560 --> 00:29:36,000 Speaker 2: many logistics businesses. 615 00:29:36,120 --> 00:29:40,000 Speaker 4: The two partially questioner. The first part is what happens 616 00:29:40,040 --> 00:29:44,200 Speaker 4: to the distribution of roofing supplies and waterproofing supplies too, 617 00:29:44,200 --> 00:29:46,600 Speaker 4: because that's part of the very fast growing part of 618 00:29:46,600 --> 00:29:50,800 Speaker 4: this business intercession or and economics slow down. For eighty 619 00:29:50,840 --> 00:29:54,440 Speaker 4: percent of what Beacon does, you're still going to it's nondiscretionary. 620 00:29:54,560 --> 00:29:56,440 Speaker 4: If you have a leaky roof, you want to fix it. 621 00:29:56,600 --> 00:29:58,920 Speaker 4: Whether the economy is good or bad, that's not the point. 622 00:29:59,360 --> 00:30:01,880 Speaker 4: As you got rain coming down into your living room, 623 00:30:01,960 --> 00:30:03,520 Speaker 4: you have buckets that are getting it. You're going to 624 00:30:03,600 --> 00:30:06,280 Speaker 4: change your roof, you just are. But twenty percent of 625 00:30:06,280 --> 00:30:09,920 Speaker 4: the business is with new construction, and it is discretionary 626 00:30:10,040 --> 00:30:13,280 Speaker 4: something it's not just regular maintenance and there that would 627 00:30:13,280 --> 00:30:16,480 Speaker 4: be affected by an economic slowdown. But the vast majority 628 00:30:16,480 --> 00:30:19,520 Speaker 4: of the roofing business is non discretionary. It's it's much 629 00:30:19,600 --> 00:30:22,800 Speaker 4: less sensitive to the economic cycles than other businesses I've 630 00:30:22,840 --> 00:30:26,440 Speaker 4: been in. Now to the twenty percent that's more directly 631 00:30:26,480 --> 00:30:29,800 Speaker 4: affected by the economy, I don't know. We're in a 632 00:30:29,800 --> 00:30:32,800 Speaker 4: situation in the economy right now where I can't point 633 00:30:32,800 --> 00:30:35,800 Speaker 4: to any other history where this has happened before. So 634 00:30:35,840 --> 00:30:38,320 Speaker 4: I don't have a good muscle memory to say this 635 00:30:38,360 --> 00:30:40,120 Speaker 4: is what's happened in the last five times we were in 636 00:30:40,120 --> 00:30:43,040 Speaker 4: this situation, and therefore that's likely what happened here. We've 637 00:30:43,040 --> 00:30:45,720 Speaker 4: never had the type of economic policy and the trade 638 00:30:45,720 --> 00:30:47,720 Speaker 4: policy that we've got going on right now. So we're 639 00:30:47,720 --> 00:30:50,120 Speaker 4: on new territory and I think it's evolving, the policy 640 00:30:50,160 --> 00:30:52,960 Speaker 4: and it's changing, and then you have reactions from from 641 00:30:52,960 --> 00:30:54,920 Speaker 4: the counterparty from the other countries. So I don't know 642 00:30:54,920 --> 00:30:56,880 Speaker 4: how it's gonna play out. I don't know how. I 643 00:30:56,920 --> 00:30:58,440 Speaker 4: don't know anyone knows how it's going to play on. 644 00:30:58,800 --> 00:31:00,960 Speaker 4: That's what's very interesting about It's very fun times to 645 00:31:01,040 --> 00:31:01,840 Speaker 4: be living in right now. 646 00:31:02,120 --> 00:31:05,040 Speaker 2: Okay, this is a question we like to ask people 647 00:31:05,080 --> 00:31:07,959 Speaker 2: who are actually doing stuff, so deal makers and people 648 00:31:08,040 --> 00:31:11,560 Speaker 2: like that. But what was the hardest part of this acquisition? 649 00:31:11,600 --> 00:31:14,360 Speaker 2: So I know it's still early days, but just in 650 00:31:14,440 --> 00:31:16,920 Speaker 2: terms of the process so far, what did you find 651 00:31:17,000 --> 00:31:17,840 Speaker 2: most challenging. 652 00:31:18,200 --> 00:31:21,040 Speaker 4: So up until now, we don't close the deal till 653 00:31:21,280 --> 00:31:23,840 Speaker 4: the end of April. Up until now, when we've been 654 00:31:23,920 --> 00:31:26,240 Speaker 4: negotiating to do the deals, they didn't want to sell. 655 00:31:26,720 --> 00:31:28,400 Speaker 4: I mean, it was just we just got the hand. 656 00:31:28,760 --> 00:31:31,360 Speaker 4: We just couldn't get a conversation, couldn't get a meeting. 657 00:31:31,840 --> 00:31:34,520 Speaker 4: I never met the CEO until last week. We just 658 00:31:34,560 --> 00:31:37,200 Speaker 4: couldn't get a meeting, and they were reluctant to sell. 659 00:31:37,680 --> 00:31:39,800 Speaker 4: So that was kind of tough to buy a company 660 00:31:39,800 --> 00:31:41,760 Speaker 4: when you don't have someone on the other side who 661 00:31:41,800 --> 00:31:43,440 Speaker 4: wants to meet and they want to sell. They were 662 00:31:43,480 --> 00:31:46,680 Speaker 4: proud of their company, They had a high value expectation, 663 00:31:46,800 --> 00:31:49,000 Speaker 4: and they wanted to continue executing on their planet. They 664 00:31:49,000 --> 00:31:51,280 Speaker 4: had confidence in so that was tough. It was tough 665 00:31:51,280 --> 00:31:54,640 Speaker 4: to overcome that, I felt. I felt that the right 666 00:31:54,680 --> 00:31:56,960 Speaker 4: thing to do was to make them an offer and 667 00:31:57,040 --> 00:31:59,400 Speaker 4: just stick to that price no matter what happened. Now, 668 00:31:59,800 --> 00:32:02,360 Speaker 4: as it turned out, Tracy, between when we made them 669 00:32:02,360 --> 00:32:05,320 Speaker 4: the offer, which I think was November, and as the 670 00:32:05,360 --> 00:32:08,920 Speaker 4: months progressed. During the offering process, the market got worse, 671 00:32:09,000 --> 00:32:11,800 Speaker 4: the economy got worse, the building products got worse, the 672 00:32:11,840 --> 00:32:14,760 Speaker 4: stocks got worse, and we had people advising us saying, 673 00:32:15,240 --> 00:32:17,760 Speaker 4: you know, Yota, just withdraw your offer, let their stock 674 00:32:17,840 --> 00:32:19,880 Speaker 4: go down twenty to thirty bucks or whatever would have 675 00:32:19,920 --> 00:32:22,520 Speaker 4: gone down and come back with a much lower price. 676 00:32:22,560 --> 00:32:25,400 Speaker 4: And I really struggle with that. That's just not how 677 00:32:25,440 --> 00:32:28,000 Speaker 4: we roll. And yes, we would have saved some money, 678 00:32:28,040 --> 00:32:30,280 Speaker 4: but it would have been I don't know, we had 679 00:32:30,280 --> 00:32:32,480 Speaker 4: ethical challenges with that. It's just not it would have 680 00:32:32,520 --> 00:32:35,400 Speaker 4: hurt our reputation, and we didn't do it. We liked 681 00:32:35,400 --> 00:32:36,880 Speaker 4: the price of one hundred and twenty four and thirty 682 00:32:36,880 --> 00:32:38,520 Speaker 4: five cents. On hundred twenty four dollars and thirty four 683 00:32:38,560 --> 00:32:40,880 Speaker 4: cents thirty five cents, it makes sense we're going to 684 00:32:40,880 --> 00:32:43,120 Speaker 4: be able to double the profits over time. So it worked. 685 00:32:43,120 --> 00:32:45,840 Speaker 4: We're buying it at a reasonable price. But it was 686 00:32:45,880 --> 00:32:48,200 Speaker 4: it was a challenge to figure out do we play 687 00:32:48,280 --> 00:32:50,160 Speaker 4: tough guy like a private equity guy would have done 688 00:32:50,160 --> 00:32:51,920 Speaker 4: and retrade the price, or do we just do the 689 00:32:51,960 --> 00:32:53,440 Speaker 4: right thing and stick to the price. So we stuck 690 00:32:53,480 --> 00:32:53,880 Speaker 4: to the price. 691 00:32:54,120 --> 00:32:57,600 Speaker 3: In your life experience, does everyone have a price? 692 00:32:58,440 --> 00:32:59,400 Speaker 4: Well, what do you mean by that? 693 00:33:00,320 --> 00:33:02,480 Speaker 3: You know, people are like, oh, I love this is 694 00:33:02,600 --> 00:33:04,320 Speaker 3: my family, but I would never sell it, or I 695 00:33:04,320 --> 00:33:06,840 Speaker 3: would never leave this job, I would never leave Bloomberg, 696 00:33:06,880 --> 00:33:09,120 Speaker 3: I would never whatever. Does everyone have a price? 697 00:33:09,320 --> 00:33:13,360 Speaker 4: No, some people are just so people. Principle, Well, it's 698 00:33:13,400 --> 00:33:15,040 Speaker 4: not just principle. Some people are in love with what 699 00:33:15,080 --> 00:33:17,680 Speaker 4: they're doing in life, whether it's in the arts, or 700 00:33:17,720 --> 00:33:20,360 Speaker 4: whether it's in academia, or whether it's in business, and 701 00:33:20,760 --> 00:33:22,440 Speaker 4: they just really love what they're doing. It's not a 702 00:33:22,520 --> 00:33:25,440 Speaker 4: question of money. I mean, the people I know in 703 00:33:25,480 --> 00:33:27,320 Speaker 4: life who are non money. People who are just not 704 00:33:27,400 --> 00:33:30,120 Speaker 4: into money. They're the people I respect the most. Actually, 705 00:33:30,160 --> 00:33:33,680 Speaker 4: I mean, this weekend, I sponsored the Black Music Symposium 706 00:33:33,720 --> 00:33:36,280 Speaker 4: at Bennington College, where I went to school fifty years ago, 707 00:33:36,560 --> 00:33:39,800 Speaker 4: and it was really exciting, and one of the musicians, 708 00:33:39,960 --> 00:33:41,960 Speaker 4: are a really good musician, called me on. I said, look, 709 00:33:41,960 --> 00:33:43,640 Speaker 4: I think I'm still a musician even though I'm not 710 00:33:43,640 --> 00:33:46,320 Speaker 4: doing music. I'm doing business because I'm I'm still improvising. 711 00:33:46,400 --> 00:33:49,400 Speaker 4: I'm still putting teams together, and I've got harmony going on, 712 00:33:49,600 --> 00:33:51,680 Speaker 4: and I've got a beginning in the middle and an end, 713 00:33:51,720 --> 00:33:53,760 Speaker 4: but not much in between those things. And it just 714 00:33:53,800 --> 00:33:55,480 Speaker 4: comes to that, said, let's punch of crap. You know, 715 00:33:55,640 --> 00:34:00,040 Speaker 4: you're not a musician, You're you're not an exist. 716 00:34:00,560 --> 00:34:03,440 Speaker 2: I know, all right, Brad Jacobs, thank you so much 717 00:34:03,440 --> 00:34:05,760 Speaker 2: for coming back on odd Lots and walking us through 718 00:34:05,840 --> 00:34:07,840 Speaker 2: the latest deal. Congratulations, really pleasure. 719 00:34:07,840 --> 00:34:09,359 Speaker 4: You know this is the only podcast I'm doing. 720 00:34:09,440 --> 00:34:13,160 Speaker 3: Thank you. We're cutting this clip. We're cutting this clip 721 00:34:13,160 --> 00:34:13,600 Speaker 3: and running that. 722 00:34:14,040 --> 00:34:28,279 Speaker 4: Thank you so much, Brad. Thank you, Joe. 723 00:34:28,320 --> 00:34:31,040 Speaker 2: That was a really interesting conversation. We don't normally do 724 00:34:31,320 --> 00:34:35,920 Speaker 2: episodes about specific transactions, but I think this one was interesting, 725 00:34:36,320 --> 00:34:39,120 Speaker 2: not just from a macro perspective, but just out of 726 00:34:39,160 --> 00:34:42,120 Speaker 2: the broader m and a environment, as we've been discussing, 727 00:34:42,640 --> 00:34:46,200 Speaker 2: kind of lackluster recently. So it was good to talk 728 00:34:46,239 --> 00:34:49,040 Speaker 2: about a big deal that has actually happened. 729 00:34:49,160 --> 00:34:53,279 Speaker 3: You know what was interesting You asked Brad about the 730 00:34:53,320 --> 00:34:56,400 Speaker 3: state of the economy, and it was sort of cagey 731 00:34:56,480 --> 00:35:00,759 Speaker 3: about it. Then in his next question he talked about 732 00:35:00,800 --> 00:35:03,040 Speaker 3: the environment from November to now. He's like, oh, the 733 00:35:03,080 --> 00:35:05,759 Speaker 3: economy slowed. So he gave a little hint there that 734 00:35:05,840 --> 00:35:08,680 Speaker 3: he there's I mean, look, the market has sload, for sure, 735 00:35:09,600 --> 00:35:11,960 Speaker 3: but a little hint about the state of the environment 736 00:35:12,040 --> 00:35:14,840 Speaker 3: maybe in that answer. But I really like talking to Brad. 737 00:35:14,920 --> 00:35:18,680 Speaker 3: It is fun, you know, it's interesting. Here's something really confusing. 738 00:35:19,000 --> 00:35:22,680 Speaker 3: You know that phrase deals are my art form. Other 739 00:35:22,719 --> 00:35:23,760 Speaker 3: people paint beautiful. 740 00:35:23,880 --> 00:35:23,920 Speaker 4: No. 741 00:35:24,160 --> 00:35:26,400 Speaker 2: No, I do not know that phrase. No, but it's 742 00:35:26,640 --> 00:35:28,040 Speaker 2: something people actually say. 743 00:35:28,320 --> 00:35:28,440 Speaker 4: No. 744 00:35:28,560 --> 00:35:30,759 Speaker 3: So like, there's this quote deals from my art form. 745 00:35:30,800 --> 00:35:34,000 Speaker 3: Other people paint beautifully on canvas or write wonderful poetry. 746 00:35:34,040 --> 00:35:36,480 Speaker 3: I like making deals, preferably big deals. That's how I 747 00:35:36,520 --> 00:35:38,880 Speaker 3: get my kicks. I always thought it was a Trump quote, 748 00:35:39,000 --> 00:35:41,680 Speaker 3: but then I searched it and appurely, and Koch said it, 749 00:35:41,719 --> 00:35:44,480 Speaker 3: and now I'm really confused. Anyway, I don't I don't know. 750 00:35:44,560 --> 00:35:47,600 Speaker 3: It's a great phrase. But you know, hearing Brad talk 751 00:35:47,640 --> 00:35:49,320 Speaker 3: about the end, it's like, I'm still a musician, and 752 00:35:49,360 --> 00:35:52,040 Speaker 3: it's like, nor your art form is deals. It sounds 753 00:35:52,040 --> 00:35:53,520 Speaker 3: like he really likes like. 754 00:35:53,560 --> 00:35:56,400 Speaker 2: Doing you like steelmaking for sure. The other thing I 755 00:35:56,480 --> 00:35:58,839 Speaker 2: was thinking, you know, we were talking about price and 756 00:35:58,920 --> 00:36:03,000 Speaker 2: that forty percent premium that they're paying for Beacon, and 757 00:36:03,280 --> 00:36:06,120 Speaker 2: I had that, you know, that scene from Succession in 758 00:36:06,160 --> 00:36:06,920 Speaker 2: my mind. 759 00:36:07,000 --> 00:36:10,000 Speaker 3: Because I haven't seen Succession. I know, let's not talk 760 00:36:10,040 --> 00:36:10,400 Speaker 3: about this. 761 00:36:10,480 --> 00:36:10,719 Speaker 4: Go on. 762 00:36:10,800 --> 00:36:13,040 Speaker 2: Wait, wait, okay. So there's a scene where you know, 763 00:36:13,200 --> 00:36:15,799 Speaker 2: they're making a bid for another company and they just 764 00:36:15,880 --> 00:36:19,239 Speaker 2: throw out this insane number and the head of the 765 00:36:19,400 --> 00:36:22,759 Speaker 2: media empire at that time, the sort of patriarch of 766 00:36:22,800 --> 00:36:28,040 Speaker 2: the family, says congratulations on saying the bigger number. And 767 00:36:28,120 --> 00:36:29,960 Speaker 2: so I always think about that when it comes down 768 00:36:30,000 --> 00:36:33,160 Speaker 2: to pricing for M and A. You have to watch Succession. 769 00:36:33,160 --> 00:36:33,439 Speaker 2: I can't. 770 00:36:33,600 --> 00:36:37,520 Speaker 3: Oh no, no, that's not my thing. I did really 771 00:36:37,600 --> 00:36:38,640 Speaker 3: like it. You know, it's interesting. 772 00:36:38,719 --> 00:36:43,760 Speaker 2: Wait wait, not media plus business. 773 00:36:44,320 --> 00:36:47,040 Speaker 3: Let's talk about this another time. I've watched like four 774 00:36:47,080 --> 00:36:49,359 Speaker 3: episodes and I was so bored. It was like, Oh, 775 00:36:49,440 --> 00:36:51,120 Speaker 3: it gets good at the eighth episode. I was like, 776 00:36:51,200 --> 00:36:52,920 Speaker 3: I'm not giving that much of my life to get 777 00:36:52,920 --> 00:36:55,160 Speaker 3: it into a show if it doesn't anyway. You know 778 00:36:55,200 --> 00:36:57,760 Speaker 3: what I think is really interesting is a few aspects 779 00:36:57,800 --> 00:37:01,480 Speaker 3: of this deal. One obvious leave that, and I didn't 780 00:37:01,480 --> 00:37:03,560 Speaker 3: know this that, at least for a lot of roofing 781 00:37:03,680 --> 00:37:07,239 Speaker 3: that there is this very complete domestic supply chain. But 782 00:37:07,400 --> 00:37:11,320 Speaker 3: also just this idea that as the housing stock grows, 783 00:37:12,040 --> 00:37:16,279 Speaker 3: you create perpetual demand even if the housing stock isn't 784 00:37:16,320 --> 00:37:19,000 Speaker 3: really growing, because roofs have to be replaced. And that's 785 00:37:19,040 --> 00:37:22,560 Speaker 3: stat that actually eighty percent of the business of roofing 786 00:37:23,120 --> 00:37:26,680 Speaker 3: is non discretionary. I thought it was pretty interesting just 787 00:37:26,719 --> 00:37:29,759 Speaker 3: thinking about like, at any given time, most of the 788 00:37:29,800 --> 00:37:33,520 Speaker 3: demand for roofing equipment is existing homes that need to 789 00:37:33,600 --> 00:37:34,640 Speaker 3: upgrade and fix something. 790 00:37:34,960 --> 00:37:37,759 Speaker 2: No one gets a new roof for fun. And I 791 00:37:37,840 --> 00:37:39,839 Speaker 2: know that from experience, right. 792 00:37:39,880 --> 00:37:42,640 Speaker 3: So maybe Brad I could see it. 793 00:37:41,960 --> 00:37:44,040 Speaker 2: Just to test it, gets a new roofing business, or 794 00:37:44,120 --> 00:37:45,960 Speaker 2: he gets a new roofing company for fun. That's right, 795 00:37:46,040 --> 00:37:47,359 Speaker 2: all right, shall we leave it there. 796 00:37:47,440 --> 00:37:48,160 Speaker 4: Let's leave it there. 797 00:37:48,239 --> 00:37:50,640 Speaker 2: This has been another episode of the All Thoughts podcast. 798 00:37:50,719 --> 00:37:53,640 Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway. 799 00:37:53,760 --> 00:37:56,680 Speaker 3: And I'm Joe Wisenthal. You can follow me at the Stalwart. 800 00:37:57,120 --> 00:37:59,799 Speaker 3: Follow Brad Jacobs you can check him out I Think 801 00:38:00,000 --> 00:38:04,120 Speaker 3: on LinkedIn. Follow our producers Kerman Rodriguez at Carman armand 802 00:38:04,160 --> 00:38:07,400 Speaker 3: dash Ol Bennett at Dashbot and Kale Brooks at Kalebrooks. 803 00:38:07,719 --> 00:38:10,360 Speaker 3: More odd Lots content go to Bloomberg dot com slash 804 00:38:10,400 --> 00:38:12,560 Speaker 3: odd lots. 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