Would You Buy This $3.6M/Year Flower Farm?

0:00Hey, welcome to Acquisitions Anonymous. Today's deal. Believe it or not, both of the co-hosts told me, Michael, that they really thought the deal was a good find. and at least one of them was very interested in pursuing the deal for real. Meanwhile, one of us, you can guess who it is because he's wearing glasses, did not like the deal. So stick around for the whole thing and you can figure out why each of us thought something entirely different. Here it is. We'll start Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % ears anymore. And thumbs downing on just the plus inventory.

0:35So today's video is actually sponsored by a company I started called Bedrock Quality of Earnings. And Bedrock is a service for business buyers. If you're going out to buy a business, one thing you don't want are surprises. There are tons of stories out there of people who buy businesses. They get into them and three months later, they realize the numbers that the seller told them, well, they weren't true. In a situation where people are often buying businesses and signing personal guarantees, meaning they're really on the hook to return that money to a bank or anybody they borrow it from, that could be a disaster.

1:06So Bedrock is a quality of earnings firm. They're people you hire that go in and look at the seller's books to make sure what you're being told is actually true. And there's lots of quality of earnings firms out there. What makes Bedrock different is it's the only one that has three things. Number one, a CEO, a guy who comes to us from a big four firm and has been doing quality of earnings reports, well, basically for a long time, his whole career, basically. Bedrock is also backed by people you trust and know, including me. You know where to find me if you're unhappy with their service. And number three, Bedrock uses the latest technology, AI and all that different kind of stuff to make sure you get the best results at the best price.

1:41So if you're interested, book a call with the CEO, Will. You can go to bedrockqoe.com or check out the link in the comments below or the one on the screen. Thanks. Well, good morning, gentlemen. Happy Friday. It's a very happy Friday. Yeah. Well, Jordan, we're so happy you're here. And it saved me from having to look at Mills' crotch again when he stands up. Glad to help. Welcome, listeners, to Acquisitions Anonymous. Well, believe it or not, gentlemen, I have a deal. But before we get to that, Jordan, I'd love to give you a chance to give the audience 60 seconds about yourself and Acquisitions Lab, and then I'll pitch you on this deal I found.

2:23Awesome. All right. Thank you, Michael. Great to be here with you and Mills. It's my second time coming on. So thanks for having me back. Love the show. I'm the CEO of Acquisition Lab. For those of you who don't know, our mission is to help acquisition entrepreneurs throughout their journey. Quick ad on us. There's more, of course, on acquisitionlab.com. You can check it out. So throughout their journey. So learning about how to buy a business. We have a community of over 1 ,300 now acquisition entrepreneurs. For 500 of them have bought a business. really proud of that. So it's like a serious community.

2:55People are like actually gonna, gonna go on and buy a business. We have a deals platform. We source deals for them. We have a fund that invests alongside them and deals where they want outside capital and where it makes sense. And we have a portfolio service team that helps them manage the business after they bought it, accounting, finance, and so on. So we're trying to do kind of all that under one roof so we can support the same person like throughout, throughout their journey, which can be a really long time in buying and running a business. So love ETA, love acquisition, entrepreneurship. I bought a small business myself.

3:24My partner, Tim Erickson, bought a business. He went through the acquisition lab, found it really helpful. And we ended up kind of combining resources and pulling it together, trying to build a bigger thing. So anyway, enough about that. I'm excited to see this deal. Jordan, you guys have repeat buyers too, right? In the lab, like not just first-time buyers. We got to get better data on that. I would love to have a specific number for you. I don't, but yes, yes. I mean, sometimes people, you know, buy one business and then they end up wanting by you know doing a roll-up or even just buying one or two more in the same same space which makes a lot of sense but yeah sometimes people want you know try to build their own like baby berkshire right and yeah uh and buy one and then something totally unrelated which is cool too we usually advise you like don't don't run too fast to buy yeah business and another business and another business before you first stabilize you're signing a personal guarantee with an sba loan so like walk don't run and uh but maybe eventually So yeah, it gets addictive.

4:16Once you bought one, it kind of goes well. You tend to want to buy another one. I was told in Jordan in the pre-show Mills, one of the things I noticed which surprised me was we know that entrepreneurship through acquisition is a pretty lonely endeavor. A lot of times you're just sitting there hearing no over and over again for months, not feeling like you're ever going to get anywhere. But what I noticed was pretty cool as I was mentoring a number of the folks in the program was they were actually making friends with each other and commiserating and had a place to check in. people who are on the same journey.

4:45And that's not something that's easy to find. And it's cool that the lab does that. Yeah, that's super cool. All right, let me put you guys on this deal. I like it already. Let's go. Let's go. Yeah, I'm in. Mills will run it. So there is a problem with this deal. And I'll let you guys kind of figure it out as we get through it. All right. So it is a flower farm operation that includes full facilities for sale or lease located in Bronson, Missouri, which is Branch County, which is coincidental because except for Michigan, I've never heard of any of the things associated with this. Bronson, oh, Michigan.

5:26It's not Missouri, Michigan. Is that right? MI is Michigan? Yep. Cool, thanks. Thank you, Geography Mills. Except for Michigan, I've never heard of any of these places. And we have here a picture, Jordan, And this looks like a farm with some greenhouses. Is that what you see? You know what I notice is red metal roofs. Oh, flowers. Yeah, there you go. And look at this staff. This looks like they're real staff mills. Yeah. Like people here cutting sunflowers. These all look like migrant workers, which is pretty interesting. and also interesting how they're dressed for cold weather so I wonder if this is a refrigerated area or it's just cold outside could be any of the above and here's another group of workers they're working and this looks very manual like I think flowers are relative to more industrialized farming like corn production and harvesting is not nearly as manual as this interesting there's a lot of AI robots, robotic companies now coming out standard bots and agility and a bunch so i'm curious to see at what point that might change but probably not for another five years or so um yeah i'm still scrolling through the photos they have apparently pictures on this photos i usually there's like three photos jordan and then we'll be like okay cool let's read about the deal but this apparently is the first listing i've ever seen that number one seems to have been designed in 1991 inside their office uh and oh my god look at this photo of their car and then they have a picture of every single room in the office well it is real estate it's it's a real estate partially a real estate listing for sale for lease yeah and it it was designed in apparently 1985 and not updated since then and they have a basketball gym oh oh they should have led with that and a workout gym they have like a workout area at the office and then some pictures of okay we're back to the beginning all right so So it's interesting when I Googled to find it, it comes up on LoopNet.

7:39Interesting. That may explain the red flag that I'm hoping you guys see too. So, all right. So for this flower farm operation, they're asking$2 million. The real estate is$800 ,000 and it says it's not included in the asking price. They did gross revenue of$3.6 million. And it's an established farm with a strong wholesale network and expansion potential. It was established in 1971, and it's a 2 ,850-acre flower farm operation that represents one of the largest gladiolus growing enterprises in the United States. Led by fifth-generation growers with over 55 % of experience, this business has built an impressive wholesale network of more than 150 clients across the United States and Canada.

8:25They generate an annual revenue of$3.6 million with a diverse customer base where no single client represents more than 7 % of total sales. This risk mitigation strategy ensures stable revenue streams across major supermarkets and florists. The comprehensive facility is about 100 ,000 square feet and includes specialized production capabilities for gladiolus, sunflowers, peonies, and greenhouse crops. A modern greenhouse facility built in 2002 supports year-round production potential and expansion opportunities. As one of the largest operations of its kind domestically, this business enjoys minimal competition in gladiolus production with no meaningful foreign competition.

9:03The market position provides significant competitive moats and pricing power. They list some growth opportunities here, new product lines, expansion of sales, leverage existing infrastructure, blah, blah, blah. The retiring owners are committed to providing comprehensive training and hands-on support to ensure seamless transition and continued success. Buildings, equipment, and employee housing are available for lease, creating a complete turnkey opportunity. It is a rare acquisition opportunity, according to Broker. It employs 72 employees, 12 full-time, 60 part-time, and the seasonal employees are H2A employees.

9:40Yales, those are migrant worker visas. Is that what that is? Yep. Gotcha. I like this for so many reasons. Please keep going. There is more stuff about the construction of the facilities here, but then they also offer 150 beds of employee housing that have been inspected by the state of Michigan. Jordan, I guess these people come in from south of the border. That's what their pictures look like. They stay at the farm. Is that what I'm reading? Nice. They got a gym. They got a basketball court. They have forklifts, F-450 trucks, not those F-250s or Dodge pickups that you drive, Mills, because these are real Americans.

10:26dump trucks, refrigerated straight trucks, semi-tractors, flatbed trailers, backhoe, Hagee highboy sprayers, and multiple 80 to 300 horsepower tractors. Do you want CapEx? We got CapEx. That's what's going on here. All right. They report some of the stuff here and the owners are selling because they are retired. The current owners are planning for retiring. Oh, and they have a map here of where this is. It's Great Lakes Glads is what this business is called. Oh, is it? They outed themselves. They gave us the address. We're not trying to out them. But if you Google the address, you get Great Lakes Glads.

11:11G-L-A-D-S. So this is really far north then? This is up there in the upper? No, it looks like it's kind of halfway between. Hang on. Where was it? I had it. Oh, wait. I just zoomed out. It's on the Indiana border. Yeah, it's halfway between like South Bend and Ann Arbor. And south of Kalamazoo. Are they only doing gladiolus flowers? They have a lot of pictures of sunflowers, so I don't think so. Do you guys know where the word gladiolus comes from? No. Educate us. Latin, gladius. Gladiator. Gladiator is sword. It means sword in Latin. So they're like the sword lilies. That's kind of cool. that is really cool that is fun what does a gladiolus look like it uh it's a long skinny flower or a long long skinny stem and the flowers grow like vertically up it it's a very i mean i guess all flowers are aesthetically pleasing it's very pretty oh this is something about the location the weather the climate that makes it particularly conducive to growing gladiolus it's interesting too that they have 2 ,850 acres is what they say.

12:23And, you know, obviously large-scale farming operations like this do not always own all of the farmland. They lease a lot of the farmland. And what I'm trying to sift through here in this is what you're actually buying because they, in the facilities, they have about a hundred thousand square feet. And, um, you know, some of this is office, some of it is warehouse, some of it is, um, refrigerated space. Some of it is greenhouses on loop net. There's actually like a building diagram that has like square footage by area, but they specify that some of these are just facilities for lease. Um, and then others like the employee housing building is specifically for lease.

13:06It's 150 bed. It's like basically a small hotel or a medium-sized hotel, but it doesn't look like they're selling that. They don't want to sell that. So really figuring out what's for sale and what's for lease is, I think, going to be paramount here. So if you want the real estate and the business, it's$2.8 million. But I think if you guys, was there something key kind of critical to any business purchase I did not talk about? Well, actually, I don't think that's the whole price because if it's 2 ,850 acres, it's worth more than$800 ,000. So I think there's$800 ,000 of real estate available to buy, but it's not 100 % of the real estate associated with the business.

13:52Well, why would they do that? Yeah. Well, some of it they don't own. So let me share my screen really quick. Oh, okay. So they're leasing some stuff. All right. Yeah. So if you look here, this is the address that comes up uh on loop net and this is how i figured out that it's great lakes glads and you and the same picture uh that was on loop net you know you've got these red metal roofs and some greenhouses and stuff like that this parcel is only 193 acres which i mean is also it's still very large but if you look around i mean these are all farm tracks and it may be that like for example this wilson llc wilson llc wilson llc wilson like it may be that they're leasing a lot of these uh for additional production so conceivably some of this is for sale i don't know if on this site if this also includes the you know for lease uh motel you know and things like that got it mills very impressive recon wow i'm sharing my screen now what uh what app was that that you were using land glide it's uh 9.99 a month and it aggregates uh county gis data so you can like go to like i live in richland county south carolina i can go to richland county gis maps but then if i go across the county border i'd have to go to the next county's gis and like I don't even know what county this, I think you said it, but it aggregates all of that.

15:26Yeah, take it. For$10 a month. So, all right. So let me ask you this. You were making an important point and I derailed it. Sorry. So you can go back to your point. You're doing a great job today, Bill. Yeah, you just keep it up. Yeah, don't. You're never a disappointment to me. So let me ask you this, Jordan. This list thing, they're kind of missing a key factor, which is they don't talk about whether this thing makes any money or not. And farms are historically one of the most difficult businesses. We've made it incredibly difficult in this country to be a farmer, especially a small one. When you see this deal and there's no profit even mentioned, how do you react to that?

16:03How do you think about it? Right. Yeah, you really can't evaluate it. There's just too many missing. I think if you like flowers, you like sword lilies, you don't mind being in Michigan, you maybe have some sort of reason to be in this business. some sort of competitive advantage. You know about the space or maybe you have some extra distribution that you could bring in or relationships with. I presume they're selling to grocery stores and so on. I don't know. I know they don't have a lot of customer concentration. That's an exciting point. But I don't know how to think about the asking price without knowing the cash flow.

16:38We can't get to a multiple. And then, of course, to Mills' point, we don't know about the lease and what the terms of that are. On the positive side, I did similar to the business we looked at last time. I was on the show, a very, very different business, but that came with airplanes, right? It was like a flight training school. Here, I'm sure there's a lot of great bonus depreciation to be had and write-offs on not just the heavy equipment and the trucks and so on, but potentially on some of these structures as well. So that's positive, but there's not enough information to be able to figure out if this price is reasonable reasonable or not reasonable.

17:19Yeah. Well, I wonder if it's one of those scenarios where they've made the decision to be somewhat easy to figure out this business, right? And they don't want their neighbors to look and be like, oh, these guys are making a half a million dollars a year off of this thing, right? Or I think more interestingly, there's a decent chance if, Mills, to your point, they're leasing the farmland next door. They don't want those people to understand how profitable their business potentially is. And so that to me is somewhat explainable, but it also is just like one of the fundamental problems with like, okay, you're giving us enough of the teaser to just know we don't know anything because we don't know if this thing actually makes money or not.

18:00It seems to be a huge, huge labor risk as well, right? Immigration and, you know, it's a lot of people they have. So the H2A program is specifically for seasonal agricultural workers. Like H1B is the one that's in the news more because of like large technology workforce. But H2A is, I think, slightly less fickle. But I think I've talked about this on the podcast before, but got pretty far down the road on buying a right-of-way maintenance business in the Southeast. They would clear transmission lines, not like the ones in your backyard, but like the big ones for power lines. and it was started by actually a South American immigrant and he just had a landscaping business like cutting grass and he like kind of kept moving further up the food chain and he owned several motels in the southeast in this one specific kind of state for one specific power company and I mean they had thousands of miles of power lines that had to be maintained but it can be very fickle.

19:09They actually had an attorney on staff. This business was doing like 6 million in EBITDA, but they had an attorney on staff to help navigate the H2A process because it's so fickle and finicky. And there's also pinstroke risk. Like Trump came into office and H2A got almost completely eliminated for like a couple of years, if my memory serves right. But one of the things you have to do in the H2A process is you have to follow all these steps to make sure that you're not taking jobs from the local workforce. So like you have to demonstrate that you've posted the job on like local job pages and like in the newspaper and that you haven't been able to fill your needs sufficiently from the local population.

19:49And then you can bring in that workforce. But housing almost always goes hand in hand with it because the wages are not enough. And you have to like, in this case, they have 60 people seasonally who are like, I think the growing season, you know, is obviously not during cold months. So that's a compressed time frame in this area of Michigan, but you're talking about having 60 people there for probably like 30 to maybe 60 days of actually harvest season. Maybe they're there for some planting, but the harvest is the most labor intensive. Um, so this is fascinating to me, the, all the nuance and intricacies of like, you're leasing some land, you own some land, you're leasing some facilities, you have short-term employees.

20:30I mean, there's a lot that goes into this. And to your point, Michael, like, are they picking up pennies in front of a steamroller or is this incredibly lucrative? And like, there may be a reason they're not telling us. So I just did a video on the rise and fall of Dairy Queen. Believe it or not. Oh, thank you. Yeah. They're doing incredibly well overseas, but they're like almost dying in the United States. Like they're struggling. um here's a quiz for you guys so the united states population has basically gone up about two and a half three times since world war ii right we're at 350 million people plus or minus what do you think has happened to the absolute rural population in the united states since world war ii like what has happened so the overall country is nearly tripled what do you think has happened to the rural population of americans people living outside of cities since world war ii How do you define a city?

21:26People living within driving distance of working in the city, like a normal commute distance. My first thought is decline. Thank you for being particular about your guess. Any more clarifying questions from the witness? My first thought is decline, but then I'm thinking, has it stayed flat? I'm going to say it's down. I just heard you say down, so I'm going to jump on that. It's down.

21:54down 50%. Yeah, that's exactly right. 50%. Wow. Yeah, it's, you know, the story of Dairy Queen, at least in rural America, is you're basically selling, you know, you're selling into a hugely shrinking market. And to your point, Mills, like there's a reason these folks are 100 % dependent on somebody from Honduras coming up on an H-2A visa, taking the bus all the way up, you know, Mexico and coming into the United States to do this job, seasonally is like there's just even if americans did want to stand in front of a flower processing table all day and cut their fingers on sharp leaves and scissors and all that kind of stuff like there just aren't enough americans out in the farmland to want to do this kind of work like there's probably not 70 people living within two miles of this farm right and this these people hire 70 of them every season one of the biggest risks in entrepreneurship through acquisition is buying a business with fragile systems.

22:50Unclear demand or a single owner who holds all the knowledge. Franchising approaches that problem differently. You are buying into an established brand with documented systems, unit-level data, and repeatable operating playbooks. The hard part is knowing which franchises are actually worth evaluating. That's why Alex Merezniak, former CEO of 2U Laundry, built Fransy. Fransy is a free platform that helps acquisition-minded entrepreneurs explore franchise ownership without broker bias. You answer a few questions, and Fransy shows you franchise opportunities that align with your capital, lifestyle, and long-term goals.

23:18You also get free coaching from people who have actually built and scaled franchise businesses. If you're exploring ETA and want to understand whether franchising fits your acquisition strategy, visit franzi.com. That's F-R-A-N-Z-Y.com. And thanks to them for sponsoring today's episode. The interesting thing about the agriculture business at large right now is that the most growing and dynamic part of it is the direct-to-consumer model. So like if you look at beef and pork and poultry production, all the farmers have basically been very, very removed from the customer. And it's all industrialized farming.

23:57Same with flowers in this case, where if there's even a thousand acres of gladiolus, I mean, that is insane, the production that you would get on something like that. They're not all being sold within even 100 or 200 miles of where they're grown. But where all the growth that I see in the agricultural space is when like a small farmer is selling, you know, beef direct to consumer because then they're able to capture so much more of that margin. A lot of these like hobby flower farms, they end up monetizing, you know, they're selling at farmer's markets. They're selling at like, you know, kind of their own farm stand or farm store.

24:41But then they're also doing things that are like kind of agritourism. And they're saying like, we have a wedding venue or you can come here and take photo shoots in front of like our field of sunflowers or, you know, all kinds of things like that. And they've monetized it in a lot of different ways. this business I think is probably too large for that and they've got to they're locked in to selling to like the industrial farming you know mechanism and my guess is like these flowers are like ending up in our zip codes if I had to bet yeah when this is not one of those products like dairy for example or beef where people are like going out to the farm store and doing all that kind of stuff.

25:25Nobody's like, you know what we're doing today, kids? We're going to go out to the flower store on a farm halfway from Chicago to Milwaukee. It's going to be great. Well, like we buy like a share of a cow for my family, like, you know, and we stock our freezer and stuff like that. Nobody's doing that with flowers. You know, like I don't need, I don't need an acre's worth. I was just going to jump on that, Mills, because I have a friend who built this business, Butcher Box, out of Boston. Crazy successful. I don't know if that's where you get your... I don't, I get it locally, but I've heard of them and I've dabbled in it.

25:57Bootstrap, no outside capital. And it's, you know, meat from farmers, organic, fresh, you know, monthly subscription right to your door. And, but there's some nuance. So I think about what makes that work for meat that wouldn't work for flowers in particular. I don't just want gladiolus, right? If I, maybe I'd want a flower subscription, but I want a little more variety. Yeah. And, but you could think about, say, if you were an entrepreneur who had a business like that in mind and you want to own, you know, end to end the full stack. And this could be an add on you have something else for daisies and lilies, but that's the vast majority of our listeners, I'm sure are not doing that.

26:33They're thinking about, you know, buying a business with an SBA loan kind of thing, whether this would fit. So, uh, I, I would have to think a strategic buyer that's producing other flowers and other stuff and is already selling to grocery stores and still on, might pay a premium for this. It adds another skew to their list of stuff they're selling wholesale. So, Jordan, I think a question for you. You wake up tomorrow and you've inherited this business. You are now owning it. You live in Bronson, Michigan, two hours outside of Detroit and Chicago. you have to line up 70 plus workers to bus in every holiday or every growing season, hoping the Visa stuff doesn't change.

27:22And then you're selling to, it looks like a couple dozen chains of big buyers, grocery stores, and folks who are buying your flowers here. On a scale of one to 10, how happy are you that you now own this business? You just inherited. And the reason I'm asking is, Like, is this a good business to be in or is this a bad business to be in before we even start talking about price? I think the scenario in which this could be a good business, let's assume the multiple is reasonable, three or four X cash flow kind of thing.

27:57I would want to hire a bilingual GM who speaks Spanish to run the business. I would want to get on that pretty early, which is not my usual advice, but this is me. and I would want to buy it in the year in which I had a lot of taxable income such that I could do a bonus depreciation, a cost-sake study, a bonus depreciate, and hopefully get out the full amount of my cash contribution if I'm putting certainly 5 % or 10 % down, but potentially even more. I bet with this business, you could get enough first-year write-offs that you would be able to save enough on the income that you otherwise would have paid to Uncle Sam that you put into this business.

28:35you probably, you know, if you're buying it for two, let's say real estate included and other stuff, it's maybe 3 million bucks and you're putting 10 % down, 300K down. I bet that you could probably get a write-off here. I'm just totally guessing without knowing, but of at least that much in actual net savings. So I would look at it that way. If I can potentially even get this business for free from a cash in cash out perspective due to the depreciation, accelerated of depreciation on the trucks and the structures and everything else. And I had a GM who could step in and run it. Now I'm kind of getting a business for free and maybe minimal amount of work, which is always a dangerous thing to say because it's always more work than you think, especially getting going.

29:14If I had that scenario in mind, I would want to go into it with that. And then maybe I'm basically just signing for a loan, probably a PG on an SBA loan. And if I had any distribution edge, then maybe it's attractive. But otherwise on its own, no, I think it's probably too small and in a tough geography and some risky elements to it. Yeah. Well, is this one you could get a USDA loan for? Yeah. Say more about that. Say more about that. I'm not familiar with USDA loans. Well, this is normally where I go, Heather, tell us about that, but she's not here. So let me ask the next best thing. Mills, tell us about the USDA.