arl Allen dives deep into the transformative strategies behind scaling a veteran-owned architectural and engineering firm from $12M to a projected $55M in just a few years. Carl and his team explore the unique opportunities that this business offers, leveraging its service-disabled veteran-owned small business (SDVOSB) certification to secure federal contracts, especially with the Department of Veterans Affairs. The firm boasts a robust foundation of 30 highly skilled employees, a virtual structure enabling operational efficiency, and a strong backlog of repeat business. These factors set it apart as a prime acquisition target and a cornerstone for an ambitious mergers and acquisitions (M&A) roll-up strategy.

The discussion highlights the business’s core offerings, which include architecture, engineering, surveying, and interior design, as well as its specialization in healthcare projects for VA facilities. Carl’s team provides an in-depth look at the firm’s growth trajectory, emphasizing organic expansion, strategic acquisitions, and a diversification strategy that includes entering international markets. With a clear financial forecast predicting consistent revenue growth through 2028, the firm is positioned for significant profitability and scalability.

Carl also delves into the broader vision: creating an empire through bolt-on acquisitions to enhance market presence and capitalize on operational synergies. The firm’s competitive advantages, such as higher profit margins due to operational efficiencies and its ability to secure federal set-aside contracts, are key themes. Additionally, the discussion touches on exit strategies, ranging from private equity buyouts to IPOs and ESOPs, underlining the versatility and resilience of the business model.

The conversation is enriched by contributions from key team members who share insights into the firm’s alignment with their M&A strategy and its potential for exponential growth. This episode is not just a case study but a masterclass in how to identify, evaluate, and scale a business for maximum impact. Whether you’re an investor, entrepreneur, or dealmaker, this episode offers actionable insights into leveraging niche markets, operational efficiencies, and strategic vision to create lasting value.

Tune in to explore how this veteran-owned business exemplifies innovation, resilience, and opportunity in the architectural, engineering, and construction (AEC) space.

Full Transcript:

Guys, I hope you guys are having a wonderful day. And, we are here to present, an architectural and engineering firm that, we feel is an important part of our, platform.

So welcome to the future of building innovation with this AEC, which is architectural engineering and construction platform, where visionary designs meet groundbreaking engineering to transform spaces and redefine possibilities.

The executive summary. The key factors that drew us to this company is that the a and e services to the federal government, mainly VA.

They have service disabled veteran owned small businesses, superior name and reputation, flexible virtual structure and work workforce, highly experienced team, and about thirty employees.

Now our team combines systems engineers, strategic partners, civil engineer, architects, and sustainable master planner.

Our organic revenue growth for twenty twenty three, eleven million dollars twenty four, thirteen million dollars twenty five, eighteen million dollars and twenty six, twenty two million dollars dollars The strategic growth is to acquire key bolt on, architectural engineering construction and acquire international also. And all of these companies would take us to what we’re trying to build. It’s, a nice empire of a of a company that we’re trying to exit within ten years, buy and hold, trade and buy or private equity exit, IPO or will consider ESOP.

The organic growth, enhance service quality, leverage backlog, capitalize on certifications, expand market reach, diversify offerings, optimize operations, strengthen branding, existing network, expanding internationally.

And here is Jamika, Ehrman, Stephanie Patterson, Jacob Inholt, Risto, and myself, your friend, and the Ninja Financial Partner.

So key factors for this, AE services, to the federal government. To us, this platform company is more than just a firm specializing in military and VA product projects.

Our vision transcends these boundaries, utilizing this foundation as a springboard for broader opportunities.

Our big idea is to establish it as the cornerstone of an expansive mergers and acquisitions strategy.

By leveraging this robust platform, we aim to build an empire that redefines the landscape of architectural engineering and construction, setting new industry standards and creating innovative solutions for diverse markets.

The foundation of this company is the two thousand and six privately owned and one owner with a full management in place, and the second person in command has been trained to take over the owner’s responsibilities.

It has, like I said earlier, thirty, full employees, full time.

Services offered, are architecture, plumbing, technology, interior, mechanical, electrical, civil, and surveying design.

And, this is the reason why we were drawn to it because we were trying to buy other smaller firms to attach to it under the this umbrella.

And we found, serendipitously, we found this company. So the specialization design and construction support for the Department of Veterans Affairs, certification service disabled veteran owned small business.

The market VA with a ten percent annual budget increase growth is high growth due to excellent service, strong backlog and repeat referral businesses competitive advantage, SDVOSB certification allows for federal set aside and sole source contracts.

Opportunities leverage market position for aggressive national growth and efficiency, higher margins than peers due to, operational efficiencies operating virtually.

And, since you’re sir. Yeah. Go ahead, Jamika.

Oh, yeah.

Thank you, Ben. So, this company, currently have eight focus areas or business units, namely, architecture, interior design, structural, mechanical, civil engineering.

They also are are focusing on master planning, hospital planning on and construction administration.

In twenty twenty, they used to they used to focus on architecture, but because of the SBA standard size, they shifted to the engineering focus, which has a higher standard size for the SBA.

Just to reiterate what, Ben mentioned, they’re one hundred percent repeat business.

They have a very strong backlog of projects.

They’re also an SDV OSB as mentioned, and they’re focusing mainly on the Department of Veteran Affairs.

But be that as they may, they actually have a proposal pipeline of a hundred million dollars, to veer away from the VA focus.

So they’re registered in Wyoming, and, the growth initiative would be explained by Jacob in the next slide.

Yeah. So I our our our vision for this is to establish this magazine company as our our our platform or cornerstone to to to build our empire.

And our vision is to grow organically and and and branch out from the federal as well into some commercial, and into international as well in all those, different departments than they have. And as mentioned, did they all fit our our our our lanes and roles? So so it’s it’s a very good company, fit for us.

Wisdom?

Okay.

The sales projections, we have a basic projections, a current backlog, near term contracts, contracts and negotiation, and estimated new, work.

Types of projects, what we have, what they do in electronic health, recall health recording, modernizations, single focus projects, infinity delivery, infinity quality, tax task orders.

I think the range is between five hundred thousand and four million dollars per project.

HRM program deployed in twenty twenty.

Facility seamless care transit transition from DOD to VA facilities. Company selected, for twenty three e a EHRM projects on nationwide.

Task orders are contracts in seven states, mostly nonrecruiting maintenance.

Go ahead the next.

That’s this is our financial forecast, like, from twenty four to twenty eight. We’re planning to have, this year, twelve million, twenty five fourteen, twenty six seventeen, and twenty seven twenty one, and twenty eight for twenty five million. That’s organic growth for the one company. Then we have a forecast over here on the right side. What we have, then we’re building on another companies.

What we could, go all the way to the fifty five million by twenty eight.

So I think that’s a glance on on on on a project growth. So go ahead and go to the next one.

Exit options. We’ll be at exit options.

Yeah. We just got started in the the executive summary here as well.

Okay. Yeah. Yeah. We have a few option on on exiting. And was that the, Stephanie’s slide?

Yes, sir.

So thank you, Risa. We are looking for a finite financial partner with the Kahunas or Tata’s for this ninja deal.

Potentially need help with the deal structure and any bolt on opportunities. We have some in the pipeline, but if y’all have any other deals that maybe you wanna pass on, we can take a look at.

And I’ll hand it back over to Arista for the one sheet, unless anyone has any questions.

Yeah. Let’s go to through through the one sheet first, and then, then we have to take your questions.

Yeah. The growth has been pretty steady. There was a little dip on a twenty two, but that’s probably expected the backlash from the COVID.

And, we’ve, planning to have a five, multiple.

They have four point five million dollar EBITDA.

And we expected to ask in this part twenty million dollars. So, the gross margins are pretty good. EBITDA gross margin is pretty good. Not just the EBITDA margin is good.

What he mentioned that he is seventy one years old. The owner one owner owns the hundred percent what is really good.

And they have a pretty good mono cash on hands and, and quite a bit AR. So the financial is really solid.

So we can take a questions on this, one seat.

Yeah. If I could just jump in real quickly.

Just for educational purposes, this is an example of a company that’s got really solid margins. Just wanted to drop that in there.

Kyle, do you have comments? Moscow.

Now I I saw in there in reference to, because I know that you guys are trying to get away from the government, aspect of things. Whereas if you put in, you know, somebody already certified as a military, all of the things that he is, in the meantime, he stays on board to, to actually, you know, maintain those government contracts because, again, that the VA spends a lot and continuously spend a lot.

We are planning to maintain it. We are planning to maintain it. And and Stephanie has that status.

Yeah. That’s where I come in. And, also, I can add as in our, growth opportunity because I am a woman.

I can add the woman Oh, yeah.

Addition to that.

Yeah. That’s good. Yeah. If I could jump back in again, this is an example of a business that, can definitely be socialized to the private equity world.

As Kyle’s taught us in the past, we do give up a lot for that, but this business has solid numbers.

It’s got reoccurring income.

It’s got a nice pipeline of work in progress.

You know, if you guys are are needing some help in, if you wanna socialize this to the PE world, you know, ping me about it, and I can give you my thoughts and guidance.

But I think this business looks very solid from what I’m seeing.

Yeah. Definitely. We we interesting to talk to you, Leonard. That’s thank you very much. We we we we’re gonna call call you and, have a have a meeting.

Yeah. Absolutely. We we actually have included in the forecast, some of the other firms in the civilian world, if you wanna call it that, I guess, the private world. We have put them in there.

They’re very close to LOI, both of them. So we do know that it has an amazing synergy, and we don’t have to bring this particular platform company into the private initially because we already are exploring the other ones.

But we think that it works very well as a platform as you mentioned, very solid numbers.

And, because we saw the the numbers, we started to really work, to try to get our team in place, and this is why, airman, Patterson is here. So, yeah, we are very much aware of what we need to, get done, and we are open to, networking and and collaborating with, whoever we need to to get this done.

And we’re also getting a lot of questions about the, how much we’re needing there, Ben, guys?

So there is a little bit of a challenge because, the brokers, that found this deal or that we found the deal through a broker, the the filter of the broker, obviously, is that we need to, be able to submit their requirements to be able to for them to release all of the financials. So we have some financials, but we have not to speak with the customer.

And so we are trying to, ourselves this is part of why we dare to bring it out as early as we did because we really want the input. Maybe if you guys have an idea as to what it would be worth, you guys can tell us and coach us in this. I’ve not never bid into a business of this size, but, we we’re thinking that the neighborhood should be around the, the five multiple, but we doubt that that’s gonna be they’re probably gonna be upwards of seven. If you guys have any experience with this, let us know.

Yeah. And and and the brokers the brokers, he he he he penciled out the the the process. He said that a company of this size, it’s up to to to the to us or the the the potential buyers to to come up with evaluation.

And the way they wanna structure it is that that initially, they they they they’ve given us all the financials so far.

So the initial, they want us to all the potential buyers to submit an IOI, before October, and then they will pick which one they wanna move forward with.

Then there will be, access to the setup meetings. And then from there, they would do the LOIs and choose with choose which one they wanna, go with. So so that that’s that’s the the process that the broker, told us.

Yeah. And that’s typical that’s typical process with a company this size.

So it you know, when you deal with a regular business broker, they’re probably not gonna create a bid situation.

My gut is there with a boutique m and a company, for a lower middle market deal, and that’s typically the way they do it. You submit an IOI, with your best offer. The seller then looks at the different offers and decides who they wanna have a seller’s call with.

Candidly, the challenge is PE is gonna be interested in this. Right? So, you know, we talked about this in Kyle’s previous calls about, know, raising money, how, you know, PE has a tremendous amount of dry powder on the sidelines.

And this has got a lot of attractive aspects to the business that private equity loves, reoccurring income, management team in place, you know, good pipeline of future business, plus you have trade buyers as well. So, you know, I don’t know enough about the business, but it’s probably gonna drive the multiple up a little bit.

You know, a couple years ago, maybe it was a five.

Now it’s probably gonna go higher than that. So then you have to model whether, not so much what it’ll look like in the future, but can you be able to handle the debt service from the very beginning? Now the good news is is that this business is now, open to more than SBA funding. Right? So you can go to the capital markets in the private equity world, and, you’re gonna get a much better interest rate. So I think senior debt’s going for about, you know, point seven and eight now versus SBA seven a, which is more like eleven percent.

I appreciate that, Lenny. Well, I’ll be talking we’ll be talking to you for sure.

Happy to help.

There is a couple of questions from, Mayur. Let’s see. What does it say? I lost it. Let’s see.

Yeah. Al’s also got his hand up. Let’s go to Al first.

K. Go ahead.

Thank you. This the question is not so much about the numbers, or the financials on the company. But internally, how how do you have to structure to maintain I guess, it’s a kind of a question involving Stephanie.

So to maintain that, SDVOSB certification within the within the ownership of the entity, what kind of percentages have to be allocated to the qualifying party? Or or is I don’t know. Is there like, my impression from whatever previous business was, like, you have to have a majority interest. Is that still the case or the case on something of this size?

Yeah. That is correct.

We’re talking about structure equity where you’re the majority and then you’re structuring with your partners, I guess, profit, you know, interest participation type of deals internally? Yeah.

For the for the most part, we’re talking to David Girald. We’re walking through that right now, so I’m I’m not so sure that we’re able to answer that to be categorically correct.

We’re working on it.

Okay.

Yeah. But you’re absolutely right absolutely right in the general sense of it.

Alright. And even if you were keeping that guy on, you’d still have the same type of problem where he’d have to retain all that, quote, unquote, equity one way or the other if if you didn’t have a Stephanie, I’m saying. But thank god you have a Stephanie.

We’re crossing one bridge at a time.

Gotcha. Okay.

We we’re just going forward.

Thank you.

Kyle?

Yes.

Did you wanna monitor the other questions or you want me to go back to, No.

Mayur, do do you wanna just talk through your questions? Let’s see. I see you got a couple in there.

Yeah. Sure. So which which sector out of the eight is most profitable? Do you know?

Yeah. They focus on engineering side, so the mechanical, civil, and structural engineering. Right.

Okay. Got it. And then, is this in your lane?

Yes.

Well, I mean, that’s what we try to put the team upfront and to let you know what we all do. So, yes, it is very much in our lane.

Okay. Awesome. Awesome.

And then, I think we we sort of talked about it, but can you elaborate on how are you planning to fund the purchase?

We’re working through those things. We don’t even have the full scope of what where we’re going with the price. We’re very much thinking that we’re gonna try to find a way.

As you heard in the conversation, Lenny already, gave some really good ideas.

So we’re just, we’ve we think we found something that is very much in line with our dreams and our aspirations and our plan.

And so we’re going forward. We’re we’re going after it, one step at a time.

Yep. Great. Great find.

We have two other companies would be working on really closely what we can bolt on right away on this one.

Got it. See a question from Kevin in the chat.

Is there anything other than the price the seller is looking for?

We haven’t spoken with them, so we’re trying to find that out.

The the primary objective to bring this, to you guys, not that we wanted to be unprepared, we really wanted to get some of the ideas to start getting us to think the right way. When we speak with the seller, we would be using the leveraging this pool of good minds to give us these these, points and these questions. So we appreciate it.

Yeah.

And to and to add to that also, we’ve spoken a couple of, we’ve spoken with with the broker, and it seems like the seller has high emphasis on taking care of the employees as well.

Right.

I was about to type this, but I figured I’d just ask since it got quiet.

Do you know anything about their government contracting department?

Do they have capture managers? Do they what type of proposal writers do they have? So on and so forth.

Because at a certain point, you’re not trying to just maintain it. You’re trying to grow it. So those capabilities are gonna be key.

Yep. For sure. Absolutely.

They don’t Absolutely. That’s why we have a Richard Brooks. They can they can have advice.

And I’m reading Jim Helm’s, comment, and I have to agree with him. I was thinking seven north of seven, multiple.

It might be, under ten x. It’s it’s in the high, on the bell curve of the balance, let’s see, value transfer transfer value. It does it’s on the high end of the of the curve.

But it it does align so so deeply so well with what we’re trying to do that I think it would save us time to get there if there is value that we can add to it. So and we think we do have value.

So Yeah.

And and and also, the this this business, is not owner dependent. He has, he has a lot of, managers and personnel that caters to those types of work that is needed by the business. So it’s not owner dependent.

Yeah. There’s a couple of comments on the on the ten x. Yeah. We’re we’re we’re going one step at a time. We we think it is worth, a lot. It’s it’s a solid business.

I think, we have hand up.

Is the question. Yeah.

Yes. Hi, everyone.

Great presentation.

So working with people, always inspires me. And just seeing a team like this come together, I’m always curious to know from the outset of the prospect of finding the deal like this, what’s the framework of building out the team, realizing the different components that will be required to, really make this attractive to the seller.

And then also internally knowing that each component that you bring on board will ultimately add value if the deal, is completed.

Who wants to tackle that one, guys?

Go ahead, Ben.

Well, in my estimation, I think we got very lucky. We’ve been working together for months. Risto and Jamika and I have been working together. And when this, deal popped up, for over a month and two months, I guess, Jacob has has been also integrated in another in another deal, also in in the same lane.

So we decided to merge the team because we started seeing that the, skills and the, value that everybody was adding was so powerful that we thought that there’s a lot more to gain by teaming up, than than to be afraid to to to share a project. So because we started to having such a powerful synergy, we started to manifest our mastermind among ourselves for bigger deals so that we could do a platform because we’re dreaming big. We’re thinking big. So this deal popped on the radar.

And because we already had the engineer, the civil engineer, the master planner, the the logistics engineer, and myself, we just thought, well, let’s let we’re gonna we’re gonna start looking for something bigger, and this one popped up. So we knew we needed a person, and I’m very close. I I appreciate, Stephanie very much. We were goose together, and I learned a lot about what her, you know, getting things done.

So I thought this is a meritocracy here. We we actually work our way into this group, and so that’s the filter that we have used. I don’t know if that helps you or but that’s basically how we’ve done it.

And, Omari, I can also speak to the fact that, you never know what qualities, what value you will bring to someone. Right?

And I’ve been in the program for a little over a year now. I just had my one year anniversary last month.

And it’s just a matter of collecting just random things about yourself, being confident in yourself, and then putting it out there. I put it out there a few different times now about how I’m, how, obviously, I’m a woman, and I’m a service disabled veteran. And I put that out there that, hey. You know, if you need some government contracting, let’s try to see what we can do.

And there you go. That has really helped building this team.

So and I’m part of another team where my other skill sets have helped and provided value there as well. So just put yourself out there. You never know.

Everybody everybody knows everybody knows that Stephanie is a badass.

Right. That is right. Well, ultimately, though, I I think you did do need to be able to work together with, and and see eye to eye with the professionalism of of the of the other members in the team.

And I think that there’s there’s Hundred percent.

Getting it done.

Yeah. You gotta be able to click together. If you can’t see yourself hanging out with your partner or partners on a regular basis, it’s not gonna work.

Yeah.

Right. Not gonna work. Because you’re gonna be spending a whole lot more time with them than you are your own spouse.

So you better be Yeah.

On the same page and everything with them.

Thank you.

And James has a a handout.

This is more thinking out loud than than anything. Y’all answered pretty much all the questions.

I agree with Steve Holland a hundred percent as this deal’s going this deal, you you have the greatest chance of winning this deal success by building your rapport with the broker.

And but then the other aspect of it is is, y’all need to think about it and pray about it and and come up with something that’s gonna distinguish you beyond just taking care of the employees.

But beyond that, it’s gonna click it’s gonna tick that. It’s gonna catch the attention and tick the box of that owner.

That whenever you reach James.

Good. Good.

Because I’ve already been doing some background research on the owner, and, we have Maybe.

At least one game plan.

Yeah.

And we’re building more to it so that, we’ll stand out in the IOI.

So the key aspects are the the is the broker in in the owner and in the financial partner, and you’ve got a good team. So there’s no reason, unless somebody just comes in with with some crazy numbers that doesn’t work, y’all should win this. And congratulations. Great presentation.

James, I appreciate that.

God bless y’all. That could happen given the size of this.

Yes.

Part of that conversation, I and I would have it conversationally, not an interview with the broker, but I would try to see if I could glean any insights on if he’s taken it to any institutional buyers, whether they be strategic trade buyers or private equity groups because it’s big enough where it’ll get a little interest from both. Okay?

At the end of the day, my experience, even with owners that were in their eighties and they’ve had the business fifty years and they tell me that the employees and that legacy is the most important thing, they all lie. It’s always about the money first. That’s not to say that that legacy is not important and you don’t have to address it, but it’s still gonna come down to the money.

And you’ve got some options. There’s enough there where you could make part of this an ESOP to lock up those employees and take care of them and win that over. You could also raise equity and debt to acquire the business. So you’ve got some options in the structure, but I would agree that you wholeheartedly have to focus on building massive rapport with this seller.

Okay? At the end of the day, that’s gonna be more important than the broker because you want in that seller’s mindset to view you and your team as the best potential, partner to transfer his business to. Okay? And that’ll that’ll offset. It’s still not gonna overcome, you know, somebody else coming in and offer them an extra x or two on the multiple.

But, all the private equity funds, and I talk with a lot of them, you get around that four and a half, five million in EBITDA mark, and they would like to buy it under ten x. But the reality is is the strategic trade buyer will force them above twelve more times than not. Mhmm. So that’s what you guys are gonna be up against, and that’s why I made the comment.

I get to pull the deal stats. Right?

So you’ve got some data to substantiate it, but I suspect it’s gonna be closer way closer to ten than five x like you were Right.

Right. Yes. Okay. Very good point.

Yeah. We actually we actually been practicing. We have one seller of similar company, a little bit smaller, but we’ve been practicing. Now we have really good side on the seller right now. Yeah. He’s he wants to sell it to us.

And just Well, that’s that’s what you want, and you gotta be super careful.

This is a fine line that you have to walk, but your vision and plan for the growth of that legacy is how you’re gonna win them over. And that’s how you’re gonna win the equity investors as well, whether it’s private equity fund or individual proteges.

You gotta be careful not to communicate too much of your plan.

You don’t wanna be giving away free advice. Right?

Wow.

But but you’ve gotta give them enough to hook them and get them to the boat.

My goodness. That’s awesome. Jim and, James, amazing amazing input. Great. Thank you so much.

If I may just say one last thing, is Jim is spot on. One thousand percent spot on. And one other thing that y’all and I know y’all are probably doing it, but I would if you have to if you’re having to go in there and you win the deal at a higher multiple, First thing that you gotta do is you gotta go in and you need to increase business as quick as possible. And so you need to be looking at other spaces that you because there’s enough meat on the bone here that you can that you can pivot very easily into another market or into this and that and and look at the markets and see what the next hot trend is. If it’s medical, if it’s this, if it’s that. And and go ahead and and have everything in place so that that way, when once you take hold of the business, you can pull the trigger, and then you can immediately start seeing returns coming in to cover debt, to cover this and that. But, yeah, but this is a great great presentation.

Greg.

Thank you.

Well, to to, to, Jim’s point initially on the data stats, we have done in the last two, businesses at LOIs that we presented, we actually had in our presentation some of the comments on the stats that we pulled out. And they even though they were recent, the broker and the seller were expecting much higher multiples obviously than what’s documented as a as a track history. But I I suspect that this one is very much like that, gonna be like that because the other thing we’re finding is if if Jamika was pointing out to us that once we look at it, if we don’t move quickly, they they get bought bought out. They they’re moving quickly, so that’s another factor. And and and you might be right. It’s it’s more plus north of tenth multiple.

Thank you so much.

Appreciate the input. Really do.

Awesome. Well, great presentation again.