Small Oil & Gas Services Business Deal Review

0:00Welcome to Acquisitions Anonymous. Today's deal is in Canada. and that caused us to go to some weird places with it. And it was in the oil and gas services industry and specifically technology for that industry. So very interesting deal. Stick around till the end. You'll see what we thought about it. Here's the episode. We'll set Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % beers anymore. And thumbs downing on just the plus inventory link. Big thanks to High Level for sponsoring this video and helping us pay for our editors. High Level is the all-in-one CRM that handles your emails, texts, funnels, and more all in one place.

0:37Think of it like the Swiss Army knife for small businesses, and you can try it for free for 30 days at gohighlevel.com slash michaelgirdley. What do you mean? Hopefully Mills will show up. This is going to be a good episode, just you and me. Bill, I'm curious. How has your life improved being skinny Bill now? How do you feel? I feel great. I mean, so for context, for listeners, I saw my business in April. I started GLP One in May. I've dropped 30-something pounds since then. I feel great, look great. I feel much more confident. Have you ever heard the concept of food noise? You ever heard this phrase?

1:17I've never heard this phrase. Food noise is the idea that you're just kind of always thinking about what your next meal is. You're always thinking about food. Like food is just kind of on your mind. Like food occupies a large portion of your psyche. I did not realize what a portion of my psyche food occupied until I started taking GLP-1. I just think about food so much less now. Like it just doesn't occur to me. I like food still. I still eat all my meals and, you know, I enjoy good food and I eat dessert sometimes and all that stuff. But it's just, it just takes up way less of my brain. And that's been a wild change.

1:53Wild change. Yeah. Has it changed your habits while eating? And here's why I'm asking. I've been watching that show, My 600-lb Life. I don't know if you've ever seen that. I've not seen it, but I know what you mean. Yeah. It's unfortunately people who are almost always have some sort of childhood trauma, which is causing them to basically eat themselves to death, like it's slow motion suicide. So, there's 600, 700, 900-pound people with 18 to 36-month lifespans when you get that heavy. but one thing i noticed is they will videotape them for the show eating and they all eat like like this like there's they're shoveling huge bites as quickly as possible into their mouth um so i was just curious and it's one of the things i've noticed like people who tend to be naturally skinnier and oftentimes healthier they eat more slowly right they're more european with it they're putting a fork down they're taking their time so i'm curious if the GOP changed your behavior while you're eating.

2:50Do I eat slower? Maybe. I mean, what I certainly don't do anymore is finish everything that's on my plate regardless of whether I'm full. That was the thing I didn't realize. And maybe my parents, finish your plate or you're not going to get dessert or whatever. We all do that to our kids, right? Clean plate club, all that stuff. But I definitely developed this appreciation for just how big American portion sizes are. I mean, holy, like I had heard that before, like I kind of like intellectually knew that, but I have viscerally experienced just how much food I am served, way more food than I want anymore.

3:29That's crazy. Is this deal about food? Thank you. No, it isn't. The deal I found is not about food, but I think it's really interesting. So let me pitch you on this since I'm in a generational equity kick. The reason I like generational equity as a source of leads for this podcast is they do a really nice job of writing teasers. Whoever they have writing teasers, they've got the formula down. I think they're really good. I don't know if you have a different opinion. So I agree. Mills really does not like generational equity. Some of the coolest teasers we've seen on the show, I think, have been from generational equity.

4:04They do a lot of volume because they have a big footprint and their teasers are good. So I like doing their deals on the show. So let me put you on this one. It is an industry-leading measurement and control solution located in Alberta, Canada. In 2026, they're going to do$2.75 million in revenue. I don't know if that's American dollars or fake Canadian money, but one of the two, because the company's in Alberta, Canada. The 2026 EBITDA is$208 ,000. And then they have pictures of a guy who is too clean to be working in the oil fields, in my opinion. Working out on a pipeline or a refinery. And then some very nice kind of stock photos of measurement tools for petrochemicals, for oil and gas.

4:53One of these stock photos is just a caliper measuring the width of a pipe that has already been installed. Like, imagine you just approached a pipe and just measured the width of it with a caliper while wearing a rubber work glove. It's crazy. uh man you're like i can compete with this business i just go buy a ruler uh right all right this outstanding acquisition opportunity is for privately held manufacturing distributor of measurement and control equipment serving oil and gas petrochemical and process markets the company provides instruments for flow pressure and temperature monitoring plus repair calibration and parts support for multiple brands of recording equipment it also distributes complimentary oil field products for selected EOM supporting customers across North America and key international markets.

5:41So I want to come, I want to dig in on this sentence here because the first question we usually ask is what does this business do? So it says the company provides instruments for flow pressure and temperature monitoring plus repair calibration and part support for multiple brands of recording equipment. So what do you, what do we think they do? Or do I need to keep reading? so maybe you keep reading my sense I mean my sense is right you've got a some you got a whole bunch of oil infrastructure you got pipes full of steam oil like all kinds of things and you need to know the pressure temperature etc flow rate inside those pipes and there are gauges and you know all sorts of ways to measure that stuff both retrofit and original equipment manufacturer you know stuff that's built into the pipe or stuff you wrap around the pipe that uses ultrasound you know there's all kinds of ways to measure flow and pressure, temperature, et cetera.

6:34I think these guys maintain the pressure, temperature, flow measurement. It says multiple bands of recording equipment. I'm going to assume this means recording the measurements over time. Yeah. It was kind of how I heard that. Oh, Mills is here. Good, because this is an industrial deal, Mills. Hopefully, you'll know a little bit more than me and Michael. Uh-oh. Here we go. No pressure. And it's Generalish Unequity, your favorite broker. You know, that spot is up for the taking. But if they became a sponsor, I would be very nice. You would be very, it would become your favorite broker instantly.

7:10Well, we just said nice things about them before you got on. We said that they generally have a lot of volume because they got a lot of breath. And their teaser is usually pretty good. Yes. Pretty detailed. And I like doing generational equity deals on the show. So they should sponsor our pod. We haven't talked about this in a while, but do you know how they get so many deals? Do you know how? I assume because it was franchised and there's just like a ton of them. No, they do these seminars where they'll go around from town to town and do like educational kind of like, have you ever thought about selling your business?

7:46Like bring your business owner friends and they will do like not quite free, but very, very, very affordable business valuations. and you love the valuation that they give you. Like, it's very exciting. And they're like, if you like this valuation, we could build you a deck and take you to market. And that's like, you know, human behavior. They're like, well, yeah, okay. Like, I didn't think my business could be worth that much. And then there's a lot of fees associated with that and not a lot of closings. really so they charge you up front it's not as much success fee i'm sure there is i mean they they do they do have incredibly lucrative success fees they just don't have you know statistically they don't have any deals i've been seeing this is interesting because it wasn't branded by them but um you know meta and instagram goes through waves of what it shows me in ads uh for a while I was seeing like every buy a business ad, you know, Cody Sanchez and Alex, I've seen every, and then I, then they switched me to, here's how you grow your business.

9:03Um, and by the way, I opened up Instagram like January, you know, January 1st at like 1230 in the morning. And at 1159, it was showing me how to buy fireworks ads online. And then at 1230, it started to show me, here's how to go to like those like religious retreats where they put you through like a seal bootcamp for the weekend it was convinced that that's what i wanted and that's all i like are you trying to find meaning in your life come to san diego and we're going to make you roll around in the sand and go through a transformative experience yeah so yeah and anyway so last week it started to show me the hey do you want to get out of this business you have uh type type ad to come to a luncheon like exactly what you're talking about but it didn't say generational equity.

9:45It was just unbranded. Yeah, yeah. So that's probably... They very well could have been. They charge double layman success fees, but the listing agreements are incredibly one-sided. So they will try to charge a success fee, not just based on the cash at close or consideration at close, but also off of like if you lease your building back or if you sell your building as part of the transaction. And they even will try to charge fees off of the cash you take out of the business in conjunction with the closing. Like a working plan. Like the cash on the balance sheet? Yeah. Yeah. That's not all right.

10:34Yeah. Yeah, I've talked to a business owner who I looked at their agreement and they were like, is there anything I can do about this? Because now I'm going to sell. and I signed it. I didn't know any better. I've never done this before. I just said, go negotiate. All right, now I see why they're your favorite business broker.

10:56Well, anyway, the teasers are great. Let's keep going. Tell me more about the teasers because the teasers are great. This probably, well, they pay, they charge a lot of money for them. They better be good. Well, there's certain, I mean, there's certain broker sites where the listing goes up and three days later, it's gone. So you have to go and download it. otherwise it disappears very quickly. Generational equities listings, I can go back to them three months later and it's still there. So I hear what you're saying. Okay, so back to this oil and gas measurement company manufacturer in Alberta, Canada, which means it's either in Edmonton or Calgary.

11:34One of those is a nice place to live. I'll let you guess which one it is. Okay, the company enjoys a long-standing reputation for quality products and services, technical expertise, dependability, and responsive customer support built on decades of industry experience and ethical business practice. The majority of businesses from repeat customers and referrals. They have a diversified customer base, over 200 active and recurring customers with no significant customer concentration. The company-owned facility and well-maintained equipment base provides capacity for future growth with minimal additional capital and investment required.

12:04The company uses financial statements compiled by an outside accounting firm. The firm has found no material defect in the company's financials. So, uh, yay. There's nothing to see here. It's all very nice. So what do you guys like about this business? I mean, I like that it doesn't directly depend on the price of oil. You know, it's, it's not a lot of the oil field services stuff can be very boom or bust, right? Because at certain price of oil, it doesn't make sense to run certain rigs. so I think this is kind of an essential service like it's got to be running or you got to be testing your flow and measure your temperature and pressure I like that it's an essential service it's also probably a relatively small line item for their customers it's the type of thing where they're probably not getting bid out every couple months right because it's just so infinitesimal it's the type of thing where it's very cheap compared to the catastrophe if you don't do it And if you do your job well, it's very unlikely you get fired or RFP.

13:12So I do like that. Yeah, I agree. I think it's probably like a relatively low cost item on a very expensive, you know, pipeline, right? Or tank or something like that. I mean, the pictures are, you know, valves, you know, in a pipe network. So my thought is that these are probably not proprietary. They are somewhat interchangeable, but as long as you're doing a good job and as long as you, you know, aren't extracting too high of a margin, it is interesting. They say 2026 estimated revenue. It's January when we're recording this. So why aren't they telling us 2025? I mean, it would be in the SIM of course, but I feel like usually when you see estimated revenue for a year.

14:04You start seeing that in June or July. Yeah. Yeah, that is kind of bizarre. I mean, look, can we also talk about why is it so small? I mean, there's so much, the TAM of money spent in oil and gas on this stuff, they just throw the money around like crazy, at least here in the US. And it's just not very big. Yeah. And the margins aren't that good, which is kind of weird. Well, I don't think they're making anything. uh they say privately held manufacturer and distributor these are these are distribution margins you know it makes me think they're applying a bunch of valves and keeping them somewhat close by to the end user because the end user doesn't want to hold them in inventory yeah but it's weird this says manufacturer and i was thinking maybe it would be part support so like this is this is a less good business if it's a like a just-in-time distributor of valves or gauges or whatever.

14:58It's a better business if we have to do testing and maintenance on the pressure flow systems every 30 days and we have the contract to do that and that's what it is. Yeah. The margins will be better. But you're right, Mills, based on the 10 % EBITDA margin, it feels more like a distributor. Hi, Heather here. When I'm not breaking down deals with these guys, I'm helping people get the right SBA loans for their business acquisitions. Because when you're buying a business, the best financing isn't one size fits all. There's the best rate, fastest to close, the specific loan structure that you need, or a little of all of those things.

15:33That's why my company, Viso Business Capital, works with over 30 different lenders to find you the best funding in less time and with less friction so you can focus on the deal. Sign up for a free live Q &A session on SBA loans at visocap.net. Then click Zoom Sign Up in the top right corner. That's V-I-S-O-C-A-P dot net and click Zoom sign up. And I don't think that they are doing any actual like service. It's not like call us and we will come use our instruments to check your equipment. It's call us and we'll send you the, you know, they say instruments for flow, pressure and temperature monitoring.

16:15So I don't think they have like field employees. Maybe they have a technical person who can go out and help, but they're not actually performing a service. You know, I would say if they are performing a service, they need to raise their prices, which is very possible. I mean, it says, which other thing I like about this is it says it's decades old a couple times. Like it's been around for a while. It's very possible they've never raised their prices in 10 years. And maybe their costs are creeping up and their margin, they just haven't managed their margin. So maybe they need to pass a big 30 % price increase.

16:49And then you got a very different business. I wonder if this is US dollars or Canadian dollars too. It doesn't specify. I mean, it's even worse if it's Canadian dollars. That's 200 ,000 Canadian is like what? Five US dollars? Something like that.

17:06It would not surprise me if this is a two person company. Yeah. Yeah, I agree. I mean, yeah. And each of them taking home 100 grand a year. You have the guy who started it, who worked probably at one of these calibration, worked at one of these oil companies or one of the calibration companies back in the 80s. And he left and he's the guy that people call for two or three brands of these monitoring equipment that they have out there and recording equipment. and you know there's and then he has a an office manager who has been with him since the 80s and that's probably what's going on and uh he's just selling parts for this stuff and just content that's my guess you know what i bet the mode is here i bet it's alberta i bet it's the i bet it's in some rural area and like they're the ones that serve whatever installed base there is there and like nobody else wants it and they just do it.

18:06And it's probably a good business because no one's coming in their niche, you know, cause it's far away and you know, they clip 200 grand a year of profit distributing these things. And that's kind of what the business is. And it's two guys in rural Alberta, if I had to guess. I went under LOI on a business like maybe six or seven years ago that was a, um, like it was just in time and it was service, but they would do hydraulic equipment repair and it was down in Charleston. So like if you're a, you know, a brick Mason on a job site, you have a lift that you're using, uh, like a telehandler. And if it breaks, it's incredibly disruptive and expensive.

18:46Um, United Rentals and Herc and Sunbelt, they all like maintain their own equipment. Um, but, or, you know, if you're renting one and it breaks down, they just come fix it or bring you a new one and take that one off and fix it. But this company would service, you know, people who had their own. And I will say, like, it makes me think of that they were solving such an acute problem for people that the price was less material than the urgency of like, same day, I need you out here. So it was kind of a very finite resource pool because it was just a couple guys doing the work. but it makes me think you know if if these guys are if they have the only part like within you know 500 miles um there should be i would think some rationale behind raising prices like you said bill because if the line is down it's kind of like you know just fix it like we don't care just get it fixed right that's why i think they got to raise the price here that reminds me of one of the best businesses here locally that I saw for sale, you know, kind of over the past five years, it was this, um, and I don't know if it transacted or whatever, but it was out in a little small town, kind of in the middle of the oil field stuff here in, in, uh, in South Texas.

20:05So there's all this stuff out in Midland, Odessa, and then there's stuff called the Eagle Ford South of San Antonio. That's not as productive as Midland, Odessa and the Permian, but it was near here. And basically what they did was they had a bunch of random oil farm ranch stuff that was basically the stuff that if it broke at your ranch or if it broke at anywhere, you needed it the next day or you needed it right then. And so they carried that stuff. And then the genius of the whole thing was they were on call 24-7. So you could call them and somebody would open up the store for you and they would sell the stuff for like 50 % to 100 % more than you would buy it from a normal supplier.

20:49So they had these massive margins. They were running like 25 % EBITDA margins as a retailer, which was crazy because they were just doing this niche where the person had to have that particular thing. You're running an oil well, right? And the pump goes out, you need a pump right then, you're doing it. So it was a fascinating kind of niche to y 'all's perspective. And if this is like that, where it's like something somebody has to have right then and they could get better margin for it, that makes a lot to love about it. Do you have to worry, Michael, like, you know, that's a great business until it's not.

21:24Like until, how many retailers are doing great until Amazon Prime could deliver overnight in that area, right? So that's like one of those things that's great. and then either some technology or the behemoth that won't serve your area suddenly decides to serve your area, and then your moat is just gone overnight. That's what would worry me. I think there are some segments of retail, I think we talked about this, but that are more immune. I think obscure heavy equipment, parts is one of those that is more immune. The one that I really like in retail that I think we have talked about on the podcast is nurseries.

22:07Bought this like micro cap stock, like probably 15 years ago that ended up doing really well. It's Calloway's. They're in Texas, Michael. I think they might've gotten acquired, but they had like these amazing real estate holdings. And, but like, you can't, it doesn't make sense to like buy a fern, you know, on Amazon or on Home Depot online or whatever. like you go to a store and you also buy like you know a 50 pound bag of mulch that like amazon isn't coming for you know it's a three dollar bag of mulch mills i'm so glad you brought this up because i actually think it confirms my point so yes on the mulch do you know about this business that is near us called fast growing trees.com no so this business i think i have this yeah it's near it's in short it was headquartered for a long time this business has traded private equity hands like six times or something.

23:02I'm exaggerating a little bit, but like it's, it's one of those classic businesses that's just a grower and a grower and a grower and it changes private equity hands every three years and grows and then changes again. This business is doing, I think it's, it's several hundred million and say it's pushing a billion in sales, fast growing trees. And they shit, it's what it sounds like. They ship you a tree to your house. are the trees any more fast growing than any other trees i actually don't think so i think they're just trees i like the and the back end of it is just a nursery network and i don't know if they drop ship it from a nursery near you or whatever yeah michael's got it up on the screen this is a freaky big business and so i bet you know 15 years ago mills when you looked at this this business wasn't around because you could not do the logistics on a tree but like now you can do the logistics on a tree and fast going trees is coming for your lunch money and this is a great site like you can tell it's very optimized the user interface is good like yeah the domain is fast hyphen growing hyphen trees.com oh wow like come on you're telling me you can't find a domain for your business mr entrepreneur well tell that tell that to all the domain or people who are like i can't call the business that we can't get the domain the domain doesn't matter i mean anymore it's shipped it says 22 million trees i mean that is bonkers i told you it's a huge business the average order value on these things is like you know between 50 and 100 bucks what is the mode on this business logistics just like the ability to do it and probably the other in fort mill north south carolina and probably the uh the back-end nursery network, right?

24:50They're probably like hooked in with all the local nurseries. I, if I had a bet, and I don't, not familiar enough with this business to know that they're basically order router and all of the nearby nurseries either deliver to drop ship it. Which is kind of what like 1-800-Flowers is, right? I mean, they're just like, hey, we're going to call the local florists and make their day, you know, by sending them orders and extract half the margin. If I had to guess, this is basically 1-800-Flowers. but for trees. That's a good way to put it, Mills. So here's their headquarters. I pulled it up a lot better than their teacher we're talking about.

25:30Yeah, their headquarters is a giant nursery. Is that what it is? I can't really tell. Let me see here. It may just be like a little tiny office building. I'm trying to get it to... Oh, there's no street here. Satellite view. Yeah, there's no... This is why you got to watch the show on YouTube because you get to see Michael creep on people on Google Maps. It looks like it's a giant nursery warehouse. Yeah. So, I mean, maybe they have vertically. Trees everywhere. Yeah. Like they, they do ship trees. I mean, they, they are definitely shipping a lot of trees like through the FedEx network, which is wild.

26:09Yeah. Look how big this is. Holy cow. Go on YouTube. If you're listening to this and look at the fast growing trees, headquarters on satellite, satellite view. It is impressive. and you'll see a big thing on their website that's like don't come to our office yeah um yeah this is crazy well and at some point we need to do like a logging or some sort of paper mill style business because i think people all equate like wood production as coming out of the pacific northwest and they don't realize that the southeast where you guys live is like the magical place to grow trees like all of the wood the pulp like how much america does because the whole region from kind of northern Florida up to up to North Carolina is just insane.

26:50Just insane. Well, you would think people would understand because the name of the largest lumber and wood pulp company in the world is Georgia Pacific. So you would think people would realize that it comes out of the southeast. But yeah, I have a friend who sold to just further corroborate that point. I have a friend who sold his business for 220 million dollars here in Columbia that they just made telephone poles. Just wood telephone poles. You've told me about this, Mills. Yeah, I mean, it's unbelievable. Which sounds like nothing, but you have to put chemicals in it and shape it the right way and compress it and ship it, and there's work there for sure.

27:30Yeah. Do you guys want to put some closure on this Canadian instrument deal? We found something more exciting. It's the punchline of this deal. This is a fine business, right? I don't think this is a terrible business. I don't think I'm super excited by this business. It's probably a couple guys in rural Alberta distributing gauges, and it's going to be$200 ,000 a year until they raise prices, and then it'll be$250 ,000 a year, and it'll grow at inflation. Right? Yeah. I think that's accurate. And this will trade for two to three times EBITDA, I would think. It is funny how hard it seems like how much additional friction there is to trade Canadian businesses.

28:18Um, you just see it over and over again. Like, and especially when I touch people are trying to buy businesses in Canada, they're just like, Oh, it's really hard. Yeah. It's really different. All right. So mills, you're, uh, not getting the teaser, not getting the SIM. I don't think I would on this. It just doesn't move the needle. No, it's just not that exciting. Like you gotta be the right buyer here. You gotta live in the area. You gotta, a maybe it's a bolt-on you know there's this is like your very classic like boring small business target right yeah all right on that note thanks everybody for being here today we'll catch you next week for the next episode see you bye