Jason Odom

Independent business acquirer and operator | Christian, Husband, Father (x2) | ex @PIMCO | @ChicagoBooth

[Jason Odom @odom_jason]

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[Jason Odom @odom_jason]

@theownerop Remote

[Jason Odom @odom_jason]

@RohunJauhar @readwise save thread

[Jason Odom @odom_jason]

@investing_law @antonia_mdprjct Made it through ~80%, but it was a slog. Big fan of the LBJ biographies, I’d recommend finishing that series first….each one gets better.

[Jason Odom @odom_jason]

Interesting takeaway. Is there any data to support the lower “expected value” theory (e.g. higher average multiples being paid, longer average search timelines, higher % of failed searches), or is it more of an anecdotal observation? Agree it can feel this way given the increased buzz about ETA. A lot of tire kickers have entered the space, and there will always be some % of buyers doing bad deals, but I’m not convinced the aggregate economics have shifted that meaningfully in a few years.

[Jason Odom @odom_jason]

@ClintFiore Agree. In my experience, brokers often calculate SDE and label it as “EBITDA” in the CIM. And then try to set valuation expectations based on an EBITDA (not SDE) multiple…

[Jason Odom @odom_jason]

@investing_law Have you considered using phantom equity? May allow you to accomplish a similar objective while making it less complicated if an employee leaves.

[Jason Odom @odom_jason]

@Sam_Rosati SMB

[Jason Odom @odom_jason]

@investing_law @readwise save thread

[Jason Odom @odom_jason]

@NeelBParekh Zaps

[Jason Odom @odom_jason]

@FranchiseMnA What are target gross and net profit margins for a fencing business?

[Jason Odom @odom_jason]

@khemaridh I’ve explored this transition. Takes a long time to build a book of business, so acquiring one is much more appealing. But aggressive PE-backed aggregators have pushed up valuations massively in recent years. So finding the right entry opportunity is challenging.

[Jason Odom @odom_jason]

@J_M_Vogt @readwise save thread

[Jason Odom @odom_jason]

Trying to come up to speed on an industry quickly? Find a franchise system operating in that space and reach out to the franchisees.

Franchisees tend to be accessible and willing to share a lot of detail about their business/industry. After all, sharing is central to the culture of most franchise systems.

This tends to be most useful in industries like Home Services where the business model is similar across independents and franchises. For instance, I spoke with 10+ franchisees in one system in a few days and learned a ton about the opportunities and challenges in the HVAC space.

It is less relevant as a form of general research if the franchise has a differentiated product, service, or brand.

Quick Tip: The state of Wisconsin (and a few others) have a directory where you can download the Franchise Disclosure Document (FDD) for any franchise registered in that state. The FDD usually includes a list of all franchise owners, their territories, and contact information.

[Jason Odom @odom_jason]

@STLChrisH @readwise save thread

[Jason Odom @odom_jason]

@emilyleldridge Would be curious if you have any rule of thumbs for arriving at a “risk adjusted discount”? Understanding the risk can vary based on the buyer and the specifics of the situation.

[Jason Odom @odom_jason]

@tradesearcher For anyone considering joining a brand as a new franchisee, make sure you understand if/how their average unit numbers are impacted by conversions. I’ve seen some brands where many of their largest, multi-unit operators did not come up through the system.

[Jason Odom @odom_jason]

@tradesearcher Yep. Have spoken with many owners in the trades who have “converted” into a franchise system. Typical story is they see value in the business support/coaching from franchisor and are willing to forgo some royalties to grow/professionalize their operations. Potential win-win.

[Jason Odom @odom_jason]

Yes, for sure. And the comment is not meant to imply it’s impossible to build/scale this type of company without a trades background. But, in my view, if you are paying upfront fees and ongoing royalties to a franchise for their “playbook” then you want to see evidence it’s worked for other people with similar a background and aspirations.

[Jason Odom @odom_jason]

@LunatekFringe @FranchiseMnA Thanks. Will check it out.