Transcript:

Michael (00:58.842)

Welcome everybody to the Family Biz Show. I'm your host, Michael Palumbos with Family Wealth and Legacy. And today we are joined with Ray Isaac from Northwind Services Group. Most of you will know Ray from Isaac Heating and Air Conditioning here in Rochester, New York. Welcome Ray. 

 

Ray (01:16.942)

Thank you. Thanks for having me again. 

 

Michael (01:18.862)

Michael (01:19.562)

Yeah, what was great is Ray was one of the very first multi-generation family businesses that we interviewed. had you and Anthony Daniele on, and that was the start of how this show changed. When it began, it was during COVID times. And so we were just bringing in experts and consultants and what can business owners, what can family businesses do to get through, you know, 

 

Michael (01:48.248)

all the COVID times and then we started interviewing family business and like, this is way more fun than having the coaches and consultants on. I still have some on and they're wonderful, but your stories resonate more with the other family businesses out there. So, appreciate you being here. What we always do is kind of talk about your transitions, but it's, know, your history, you know, 

 

Michael (02:17.558)

You didn't start in the family business, you know, that wasn't the first job that you had, I don't believe. So I just like to remind people of kind of like, you know, what was your journey to get to where you are today? 

 

Ray (02:30.08)

okay well yeah i mean first job well actually probably was but not technically or legally when you're eight years old cutting up sheet metal in the she metal shop for dead because my mind to get wants to get out of the house on a saturday probably not the thing an eight-year-old she's is working on a jump shear cutting up the she metal scraps with my brothers and i for my dad to use on the jobs during the week so 

 

Ray (02:52.622)

and uh... we got into a little bit of mischief there we realize that some of the uh... machines there to take a round piece of metal and turn it into a uh... a ninja star that you can throw at each other i remember him coming out one day and he looked at us and you know when your kids are in trouble and they give you that look on their face and he looks and we're all looking at him like uh-oh and he's like what's going on he turns around and looks at his brand new painted drywall wall for the shop had all these little ninja stars embedded in it that we had a little war 

 

Ray (03:21.985)

in the back so we spent the next day speckling and painting the wall again so 

 

Michael (03:26.104)

So you learned all kinds of things, just sheet metal, but drywall. 

 

Ray (03:29.196)

Yeah, when you got four boys, you're gonna you're either gonna learn to break some and fix it or You know pay somebody to fix it. So we net we never any money to pay him So we end up fixing it ourselves. And yeah, so now it was it was an early beginning for all of us I mean, I got my working papers it I was 14 years old. I mean technically working in the office if the office was a construction site, but you know, we we enjoyed it We couldn't wait to get to work. My brothers and I were all about the same we 

 

Ray (03:58.38)

I mean for my 16th birthday I got a toolbox full of sheet metal tools. That is that I can give you something that's gonna waste money, I can give you something that's gonna make you money. So as you can tell, like you, I've learned a lot from my dad, I did. We unfortunately lost him last year, just about a year and three months ago. But his legacy is where your lessons, your teachings, your memories, your stories live on. 

 

Ray (04:22.508)

they still live and not only in the family but in the company i still walk around there once in a while and their stuff still on the walls and there's teachings and policies and procedures that my grandfather started that he carried through and then he passed them on to us so that's still that still lives at the company and we'll talk a little bit about our our next stage at isaac but it's it's in it's heartwarming to see that that the legacy is very strong and that they'll carry through no matter what changes go on 

 

Michael (04:50.722)

Very cool. So from 16 to today, I mean, if you condense that, we're to do the condense and then we're going to dive deep into some of the areas in the last couple of years here. 

 

Ray (05:02.414)

Yeah, 16, I mean 16 working summers, vacations, dad knew our vacation schedule better than we did because he'd check with mom and say, okay, one of the boys available and he'd come upstairs, kick the bed, say, I'm leaving in five minutes, let's go. And we were off to work with them and then we can, when we finally learned to drive and got our licenses. I do remember we were on a job once and I was like 15 years old and the job foreman comes up and he throws me the keys to the stake bed truck. He says, I want you to run back to the shop and. 

 

Ray (05:29.902)

pick up this, this and this and go get this. And I kind of gave him this dumb look. He's like, what's wrong? I said, I don't have my license. Why don't you have your license? Cause I'm 15. So he had this look on his face, me those keys back. Your dad will kill me if I let you drive the truck. I'm like, well, I was all excited. I thought I was going to be able to take the truck. just want him to know that I have a license. But so that stage, yeah, working through high school, my brother's, 

 

Ray (05:54.35)

They went into the business, but they got their journeyman's licenses. So they kind of went to a different trade school. mean, really, we talk a lot about that now, the difference between college and trade school. I believe I've seen it firsthand. was, you know, freshmen, sophomore, whatever in college and just working weekends and summers to try to make some extra money and they're buying houses and vehicles and had nice toys. I'm like, geez, I hope this degree finally gets me something. But, you know, the trades. 

 

Ray (06:22.968)

can't beat it up enough. It's, you got to keep talking about it that is such a viable career path, whether it be plumbing, electrical, sheet metal, starting your own business. I you're creating something, you're creating wealth, you're creating a legacy. And again, college is important, but it's not for everybody. And I think we've created a fallacy to think that the only path to success is through college. I know a lot of very rich plumbers and 

 

Ray (06:48.91)

and people that are doing very well that started their own businesses right out of high school in the trades. Or in other avenues, they all did very well. But I went to college, my dad said one of you is going to go and actually technically learn how to run the business. So I went to Fisher and got my four-year degree. And I remember going in one day and saying to my dad, said, you know, I think I want to go get my MBA. He said, that's nice. He says, we're going to teach you the rest. 

 

Ray (07:13.728)

So, you got the four-year, but after college, went in 1988, started as a HR manager, fleet manager, inventory coordinator, did a bunch of stuff until 1990 came around and he handed me the worst job in the company, which was service manager. Anybody who's a service manager for any type of company, whether it be auto repair or heating and air conditioning, it is the worst job in the world. You're never going to make all three parties at the company, your employees and the customer happy at the same time. You're going to be making somebody 

 

Ray (07:43.532)

you know happy and the rest of them are going to be a little upset but did that for a number of years and worked my way up through and doing different jobs became vice president general manager in ninety six and then president in around two thousand one or two thousand two and you grew the company from there and you know and we did a pretty good job and i say we it's it wasn't just me we had a great team around us and people always ask me what was your greatest skill i saw i'm a terrible manager and probably not even a great leader but i was a great team builder 

 

Ray (08:12.6)

I knew how to surround myself with people that were a lot smarter than me, which was easy because that was pretty much everybody else in the room. we grew the company from, she's pretty around six million in revenue up to when we just partnered with the private equity to about 70 million. So we had a pretty good run growing the company, but that was kind of the last phase. And it's funny, Michael, I can look back at each one of those phases and I can compartmentalize them in the position you were in. 

 

Michael (08:41.771)

Right, I mean the struggle to get to over one million, your dad had done that before you, and then there's that plateau at one million, okay, now everything's gotta change, and getting to 10 million is ginormous. It's a huge effort for every business out there, and then you guys went and did seven times that. 

 

Ray (09:05.198)

I mean those are what we call what I call levels of complexity. There's different names for them in our industry and they're like a wall and you're climbing, climbing, and all of you hit this wall and the wall is this gap. it's as you hit the wall and you got to have a ladder to get past that. If you can get past those levels of complexity, then the next run will take you to that next level. It's almost like mountain climbing. You're to come to a preface and you get there, know, precipice and you have to get across it. And then you can keep climbing and all of sudden you're going to hit another wall. 

 

Ray (09:31.074)

and you got to get above it. So, and really that's what we're proposing now and that's how we present a good value model to the companies that we're now partnering with that I'm on the merger and acquisition team. I do a lot of the acquisitions of the companies. As I was walking in today, I was on a phone call, we're looking at a company to acquire, we're going to put a letter of intent in on them. but that's what I help them with now. And, you know, I had a friend of mine once that, 

 

Ray (09:59.822)

you so they you know their secret to success is uh... poland gretsky as it was aggressive is that we skate or the parks going and that's how we presented to them we were skating toward the the park is going we we've been ten million before this is a five million we know what it takes to get the time we've been twenty million we've been thirty million not that revenue is everything but it's at least a good benchmark to know what you need in an organization in order to support that type of revenue 

 

Michael (10:27.278)

I think it's revenue, how many employees you have, the level of the abilities of the employees on the team, the leadership team, all of those things factor into getting to the next level. Before I, I want to come back to that, those levels of complexity I think is really important for people to understand. Isaac heating and cooling, you're 70 million and 

 

Michael (10:56.95)

in revenue, family members, you, your brothers, all working there, and you're approached by private equity. 

 

Ray (11:06.296)

We were approached by everybody. Approached by everybody, okay. And again, and again, I try to think back a little on the process. We were getting a letter a day. I mean, there was a big push in late teens, early, well, we decided in 2020 to finally make the move. My dad and my uncle and our families owned it up until 2017. We ended up buying the company from. 

 

Ray (11:34.302)

My uncle, my dad and my late sister in 2017. When I say buy it, we talked about this, think the last time you hear about equity business versus lifestyle, we ran it as a true equity business. We ran it like it was General Electric. Even though you own stock of General Electric, doesn't mean you can walk in there telling anybody what to do. You don't get a paycheck from there unless you're an employee. You're still held to the employment standards. So we treated it very, very purely as a equity business, which helped us in the 

 

Ray (12:04.352)

in the sale and especially in the diligence process. I we had what they call ad backs. Ad backs are the gas for the boat, the wife's car, the kids' cell phones. We had zero. And we're talking zero. And you understand zero ad backs. Nothing run through the business that was going to get ad back other than what the definition of EBITDA is. Earnings before, interest, taxes, depreciation, amortization. we had other than those things, there was no family expenses. I remember one day I went in and I 

 

Ray (12:33.634)

bought something with the company money. It was for work. I justified it as that. My dad says, nice, who bought it? I said, well, the company. And he said, well, how'd your uncle feel about that? I said, what do mean? said, well, he just paid for half of it. And that was the lesson right there. So we always ran the business as an equity business, and we never co-mingled. Family and employment were very different. One doesn't entitle the other. And I talk about the seven E's in business. 

 

Ray (13:01.516)

and what we call the 70s and then the evil 8th E. The first three E's are what we provide. We engage, we educate, we empower the foreign and we enable. And then all I want our employees to do is evolve and execute and enjoy. I want them to do those. And then there's the evil 8th E called entitlement that'll kill any family business or any business. I think Kodak. 

 

Ray (13:29.548)

died because of entitlement people felt they were entitled to you know that's right success built entitlement and it becomes and that's a lack of leadership where you have to keep tying back the results to the efforts and people all of a sudden now they feel that the efforts didn't lead to the results of the results didn't come from efforts especially from the outside a lot of times what happens on the inside it's even more dangerous 

 

Michael (13:50.542)

Agreed, agreed. And you know, and it's very few families that are running a business take that approach to what they're doing. 

 

Ray (13:58.262)

don't I know we see them right now and out buying companies we've looked at over 150 companies over the last three years and It's a minority that run it. Nobody ran it. It was running them as pure as we did that there's nothing wrong with it We don't judge. I we're not here. We're not I know we're not the IRS We're not here to judge how you justify your expenses But I don't I have yet to see a company has zero adbacks, right? 

 

Michael (14:22.712)

The reality is I'm not paying you for those ad- 

 

Ray (14:25.548)

Yeah, yeah, but they get credit for them and if we add them back then you apply a multiple they're actually we're saying look at you're not going to continue this your wife's car is now going to be your expense but whatever that cost is last year you're going to get four five six eight times that on your purchase price because it's a non-recurring expense so you know we can get into technically technicalities of it but we do show them that look you know you're going to be running this as an equity business so it is a little bit of a little bit of a shift 

 

Ray (14:53.678)

for them, it's fun to walk them through that. And I'm having a blast. It's a blast to go in and do these things and work with these companies. 

 

Michael (15:02.764)

I want to talk about that process of being approached, the family meetings that you guys had, the emotion that went with this. And then I want to dive deep into the processes today because I do think it's so important for family-owned businesses to understand what does it mean to be investment ready? What does it mean to be investment grade in your business? And I think I want to spend the most time on that, but let's go back. 

 

Ray (15:32.142)

Yeah, so the acquisition, I guess I didn't answer your question. We were getting a letter a day. When we bought the company from my uncle, we had no intention of selling. mean, we were having fun. My brothers, we'd get the letters I'd show them to them. They're like, yeah, we're not interested. And I said, yeah, I get it. We enjoy owning it. We represent the third generation. So 2017, 2018, 2019, kept getting letters. 2020, and I talked a good friend of mine down in Maryland, and he had just partnered with somebody. 

 

Ray (16:02.03)

And you know, I told him what I thought the company was worth and he's like, uh, yeah, no, I'm like, oh, is that too much? He goes, no, that's way undervalued. I said, okay, so maybe I should be talking to somebody along with that. None of us was getting any younger. Um, I, my oldest brother, Kenny is 65 now he was, you know, 62, 63 at the time we're looking at, okay, what, happens next? Because it can be very upsetting to an established business to go through that transition. I mean, we'd have people come up to us and say, guys, we don't want to work for anybody else. We're like, well, we're not going to live forever. 

 

Ray (16:32.078)

You are going to be working for somebody else. So get that in your head. Let's be thoughtful and intelligent and intentional in this process. So I started, you know, you know, just at least feeling the waters. My brothers weren't even involved in it. didn't have time. Didn't even know. I talked to different parties just to get a feel, get them more of a, get a data set together and, expectations and what, what it all looks like. And finally in the 20, late 2020, 

 

Ray (17:01.47)

we we decided to go through a formal process and solicited a a broker a banker representative to market the business that with that was a auction process the first step we we actually interviewed different ones we pitted them against each other so i want i want somebody is going to represent us the best to make sure that we had the best deal that we could possibly get and that's not just the money was all about the same 

 

Ray (17:29.196)

big difference and we're seeing that now is this is what we propose to companies when we go in and talk to them is the culture and how we're going to integrate you and what happens with your team and we had some hardcore requirements. A, we didn't want to change the name and we my grandfather would come back from the dead and kick my butt at that. So you know we didn't want to do that we wanted to honor the legacy that my dad my uncles and our families created in the area wanted our team to remain in place not only remain in place but also have an opportunity to grow. 

 

Ray (17:59.31)

within the organization. We wanted to be the platform. I probably should have asked a lot more questions about what it meant to be a platform because being a platform, we're their first acquisition in home services, our private equity partners, which by name is TrueArc is our partners, but came out of New York City, we were their first acquisition in home services. So HVAC Plumbing Electrical. So we wanted to be that platform. So, and again, when it came down to it, they all had about the same price. They all had... 

 

Ray (18:27.8)

the same tombstones of companies they've already done deals with. And they actually met all of our requirements. We did have a final, and it's funny, you got it, you got to continue, always continue your diligence. We had kind of these cleanup meetings. We already knew who our partner was going to be, but we said, okay, let's bring them in and let's just ask some questions. I included our leadership team in this. My brothers, as I said, knew about it, but they weren't involved. I didn't even let them know until we got down the process a little bit because I wanted them to focus on. 

 

Ray (18:56.622)

you the business they're all very busy there and i i took the lead on this and i included our leadership team were sitting in our meetings are final meetings and i have a saying that whenever somebody in our team knew this and whenever somebody begins an answer with well or ends it with but just disregard everything else they just said in their top partner that we had already think that we're gonna select when we asked them a question i asked him a specific question is that you know 

 

Ray (19:24.204)

are we gonna be the platform for this and where we gonna keep our name the key person there looks as they want well in our whole team looked over at me with that all boy this is not going to go for we actually booted them right out of the process and we ended up going with the one or two down from them may not have been the you know the highest price but it was the best the best culture in the best fit the best cultural fit for us so they ended up coming from 

 

Ray (19:52.334)

you know second or third place in became our preferred partner and you know what time has proven that they've been the best partner for as they have held to their word and they've been great to work with all the stories i heard about private equity i was standing ten years ago so he said would you ever sell private equity i was said no no way right they come in and they ruin your business well they've only helped us we've grown from seventy up to over a hundred million now just at isaac that's just prove positive that having those resources a capital 

 

Ray (20:22.114)

been good for us. 

 

Michael (20:24.994)

when, how many interviews do you think you went through and how many different people did you talk to in that beginning phase? 

 

Ray (20:33.057)

the beginning phase, I had a spreadsheet that I handed to our broker. He's like, what's this? said, these are all. 

 

Michael (20:37.966)

I want to take it even just on the broker level. How many different investment bankers did you talk to? 

 

Ray (20:43.342)

it's probably a dozen actually mary lynch was there i have you know my so i'm sure there and they offer a services whatever they called your your client service team said we if you're ever willing to start looking to sell your business we will run a brokerage process for you and they were one of the brokers but we ended up not using that we actually chose a guy that i had excerpt from them because he's a person i already knew from the industry 

 

Ray (21:11.456)

And with them, it was kind of the same thing. They all had the same process. They all had the same valuations or expected range. They all had the same tombstones, deals they've done. They all had the same meeting schedule, stuff like this. And it came down to, said, okay, well, if everything else is the same, I want the person who's going to be the best negotiator. want the person that's going to give me the best deal. Not just, again, not just financial, but cultural fit and knows the players and knows the industry. So we ended up going with a person I already knew. 

 

Ray (21:40.948)

And so that was that, but I handed them on the first meeting, I had a two page list of 30 or 40 contacts that I've already had conversations with. like, what is this? And I'm like, that's the people I've already spoken to. He's like, okay, yes, yes, yes. He's checking off all the ones he already knew. He says, have you agreed to anything with them, signed an NDA? I said, no, we said, okay, good. So it's a pretty intense process, but if you're gonna sell your business, I know you'll, 

 

Ray (22:10.324)

save money not having a bank or a but you're going to lose a lot more than that in A, in what you can get and not just again, I keep going not just financial but what you're going to get in the right fit. B, in making sure the deal gets done. I have found and we actually prefer, yeah we might pay a little more but we prefer that somebody we're buying sometimes is represented and I say sometimes not every deal, know some are very well put together and they don't need that but they make sure the 

 

Ray (22:40.034)

the banker, the broker, I use those interchangeably. Make sure a deal gets done. 

 

Michael (22:44.11)

Michael (22:45.591)

From my experience, I've seen this over and over again where somebody doesn't want to pay. They don't see the value. They're like, I know everybody in my industry. There's only five or six people that can buy us. We're just going to put it out to them. And what they forget is that they've never sold a business before. And so the people that are out there buying businesses have done it several times and they know the process to get 

 

Michael (23:14.092)

You know, when you're getting up to that letter of intent, the owner has all of the power. Once you have that letter of intent and you've got the NDA signed and you're now into due diligence, the seller has all the power beforehand. Once you have the letter of intent and that NDA in hand and you're into due diligence, the buyer has all the power. And the person that's selling their business has no idea of this process. 

 

Michael (23:44.032)

and how badly they're going to get beat up. They don't know whether they're ready for sale because they've never sold a business before. If you guys did it all on your own without a broker based on the fact that there was no ad back ends, the way you ran your business, you probably would have been okay. But you wouldn't have known culture fit, you wouldn't have known all of those other things, and you wouldn't have known how to ask those questions and ensure those things in the deal. 

 

Ray (24:11.01)

And that's a big thing, knowing what questions to ask. The answers aren't what's important, it's what questions you should ask. And you're right, buying a business is difficult. I think selling a business is just as difficult. We had never done either. We grew, had six locations at Isaac. We did every one those organically because I realized I was either too stupid or not experienced enough to go out and buy somebody. And I'm glad I didn't because knowing now, and the gentleman I work with is on our team, Josh, 

 

Ray (24:39.79)

Yale graduate, played fullback for him, just, you know, brilliant, brilliant kid. I call him a kid because he's a of a lot younger than I am, but you know, the questions he asks and the diligence he does and the models they build, you know, and the financial models. 

 

Michael (24:53.248)

It makes a huge difference because the buyer's job is to get that price that, you know, on the letter of interest and, where they start the whole process to get it down. 

 

Ray (25:06.39)

But that isn't ours. See, that's where we're unique. We, every single one of our deals, we have closed to the penny at our letter of intent. We never, and again, our company, at Isaac, we never did bid to spec work. We did some, but bid to spec is where you put, throw a bid in, then you make your money on the change orders. In our buying process, a lot of companies are, exactly as you say, Michael, they put a letter of intent in, they do that, you know, that. 

 

Ray (25:31.726)

get them on the line and then we're going to beat you up on the Q of E which is quality of earnings. mean quality of earnings and the diligence, I call it a conscious colonoscopy because you are awake as this thing's going through. It is tough. We submitted over 1800 individual pieces of information during our Q of E. My guy at the time, Adam, one piece of information was your last five years of review tax returns. That was one piece of information. There was 1800 of those 

 

Ray (26:01.678)

requests. They're asking about a in-ground fuel tank that we had back at two locations ago. And where's the closing report for that? said, is from like 1997. But you know, that is, that's what, but you know, we, we are very unique in that process of, we never try to beat people up, but it's nice if they have representation. But yeah, trying to sell a business is not, it's not easy. And if you, if you want to do this, if it's something that you're not just dipping your toe in the water, 

 

Ray (26:30.016)

if you want to do this and you're serious about it, you kind of need the representation in hand and glove with that is if you are going to get a broker, you are going to be serious about it because once they send out that thing called your teaser and then the SIM, your confidential information memorandum, when we sent out our teaser, the teaser is, hey, business, Northeast, heating and air conditioning, some plumbing, doing about 70 million. Are you interested? We got back the, you know, here, sign this NDA. We had 70 NDAs signed. 

 

Ray (26:59.694)

for Isaac. So we had 70 interested parties from that NDA then they get your SIM. And your SIM is not confidential. It's confidential, but it's not it's not private where they redact your name. It's all of your information, your team, you can redact some employee names and things like that, but all your financials, your marketing, everything. So all of a sudden 70 of our closest friends and competitors 

 

Ray (27:25.41)

had all of our information actually had one of our competitors close competitors in rochester cause a guy selling what he really says i got your sense it in front of me that's the one thing about with the broker if you're gonna go through an auction process my recount mike dine in cities you're not going to get just dip your toe in the water in this once you decide to go in your all the way in the pool you're gonna be soaking wet you know but we've we've been very i think very upfront 

 

Ray (27:54.04)

we we use this is a very unique selling proposition to people that were looking to buy is that we're gonna close at the deal that we've offered to you upfront we do as you heard it diligence call right there that was presenting all of the specifics of it to our p e partners to make sure they have a buy-in because then they have to go to an investment committee to make sure that if we do get this l o i sign that they can get it funded so they need to be comfortable with it so we do a bulk of our diligence before and then we 

 

Ray (28:20.706)

go back and just verify. That's why we really truly use that term, the quality of earnings. We make sure that what we bid on is within a specific range of what we're going to pay. So we've been pretty accurate on that. We're betting $1,000 on paying exactly what we've offered, which I think is encouraging to people. They don't want to be wasting time. They offered you a million dollars and all of sudden they want to pay you $500,000. That's not what we do. It's unique maybe, but we like that approach better. 

 

Michael (28:50.84)

I like it. I wanted to share a story real quick about one of my clients. had an, you know, valuation done, $33 million. So it's a relatively healthy, healthy business. nobody, you know, very few people would be unhappy with a $33 million valuation. When they were done, they ended up with 27 million. 

 

Michael (29:14.774)

And the reason for that is exactly the things that are normal in the industry. They were beat up through that quality of earnings. They were beat up on their systems and processes. And at the end of the day, they did not get what they thought. Well, 33 million to 27 million, $6 million on the table, it's an awful lot of money. And so, from my experience, from what you're talking about, and yes, 

 

Michael (29:43.532)

your company that you're working with now, that's not your philosophy. That's not what you're looking to do. You're just looking to make sure that they line up. But if somebody wasn't ready to go to market, you know, and you ran into them, you know, yes, you're trying to get them where they need to be. But at the end of the day, you can only pay what you're going to pay based on the quality of those earnings. So I think, you know, working with an investment banker or broker before you go into the process like 

 

Michael (30:13.038)

five years before you start that process to make sure that you're dotting your I's and crossing your T's and knowing the 1800 pieces of information you're gonna be asked for before you do it. That's where the broker and the investment banker really earns their stripes is helping you to get prepared for the process and then ensuring that the deal gets done when it does happen. So I just wanted to share that. I have personal experience with a family. 

 

Ray (30:28.942)

. 

 

Michael (30:42.38)

right here in town that, you said, nope, we got this covered. We can do this. We've sold things before. We know how to do this. 

 

Ray (30:51.23)

Yeah, we're not selling a furnace, that's for sure. I should say that, you know, we have uncovered things in the Q of E that would cause us to, we don't like to what we call a retrade. don't want it, which the 33 down to a 27, but we will be upfront with that and say, guys, the Q of E is not tying out. There's something that is not happening here. And it's usually, it's not our fault. We're just uncovering the facts. Maybe it's something they weren't aware of. Maybe it was a dip in performance because this is a living, 

 

Ray (31:21.033)

breathing fluid document up to at least a month before closing we're looking to make sure this thing doesn't tank. So we have had to pull out of deals. We've let companies know we try to be very collaborative in that say, okay, here's what's happening. If you can get this performance back up, we're going to go what we call pencils down. We're not going do any more work on this. Our QAV provider is going to hold off. Touch base with us in a month. Let us know what's going on. 

 

Ray (31:48.55)

and let's see if we can revisit this. And we've done that. We've done that. We've given them time to get their ducks in a row. We have a couple deals right now where we've had to do that. They've just fallen on a little bit tougher times and their past performances has been no indicator of future results. But to your point, I think there's a question there is what should somebody do five years out? And that five year, make sure you got your business in order. Start running it. 

 

Ray (32:16.354)

you don't have to go completely equity business zero add back type of thing there's always things you can justify we're not judging we're not we're not the government there's legitimate business expenses that are going to continue which you know we get but start you know make sure you have good data make sure you can tie things out make sure you have history make sure you can answer the questions of okay what's happened with your direct labor as a percent of revenue has gone from twenty six up to twenty eight percent 

 

Ray (32:41.944)

quarter, you know, for the first quarter over last quarter and your 12-month trailing performance and this is slowly cropped up, what's going on there? Making sure that your pricing is reflective of the quality of product that you're providing. Make sure you have good pricing. It's tough to go in and buy something and then immediately have to raise their prices. I mean, that's not a strategy we like to employ because nothing will cause more disruption than that. You know, as I said, we had rules. We didn't want to change anybody's name, so make sure that we still maintain that. 

 

Ray (33:10.094)

presence in the community but if somebody sees that okay you know i'd deal with bob's heating last year you know my service agreement was a hundred and ten dollars now it's two hundred twenty here what's happening what's going on and we don't advertise when we buy somebody we don't do a big spread press release we don't do a big splash will wait a month before we even tell the employees of the company if ever and we leave that up to the seller we give them a lot of control in that because they know their team better than we do we don't change the name we don't we still contribute to the communities they still have their mascot standing out 

 

Ray (33:40.216)

you know the fuzzy animals at the hockey games and things so we keep all that very you know very quiet but we you know behind the scenes a company can start really getting their ducks in a row make sure they got a good ERP system make sure they're not using some software system that they they wrote make sure that if they are going through a software transition they give it a year because it takes that much time to to tie that out make sure that their employment records are good make sure that they're complying with all 

 

Ray (34:10.306)

laws. So there's a lot that I would recommend. We have these conversations when we're doing a first intro call. We'll start asking some of these questions and we'll get a sense of why are they ready to be bought or not. Are we going to have to do a lot of work? How much wood are we going to have to chop on this once we close a deal? And we've probably backed away from more deals because of stuff like that. Is it incompetence or integrity? 

 

Ray (34:37.389)

you know those are the two things i was looking at when i'm on the okay is it is that they just don't or they trying to do something funny you know we've uh... we've seen some interesting things out there so you know and then past practices are good indication of the integrity of the organization we look at how they've been running their business companies at ten ninety nine everybody then we can guys timeout you know what what do you what are you trying to achieve her do you really want to sell this thing 

 

Ray (35:05.006)

So, you know, there's a lot that goes into it. I think my many years of being the leader at Isaac has really helped with that. And our partners, if you'll enjoy having me on the team, I hope, you know, because I can provide that behind the scenes look whenever we do a site visit. That's an early on thing that we like to walk around and kick the tires. I want to make sure that this thing passes smell test. Are you really running a $10 million business out of here? It's one room. 

 

Ray (35:32.238)

Where's the there's no there there. I mean, come on guys, you know, where are you stocking your trucks? Well, they they we we delivered it to their house in the morning. Well, that's not something we can scale. I mean, it's not scalable. There's there's heroic ever overcoming a poor process here. know, so yeah, the one person that's doing everything that's not scalable. So we'll usually shy away from that. We want a good established business that is not perfect because that's where the beauty lies and our value lies in that that a creative gain we can get in that company. 

 

Michael (36:02.658)

Let's do a little breakdown of those levels of complexity that we talked about. You mentioned when that first hurdle, that million dollar hurdle to, what levels would you break them up at? Where do you think? 

 

Ray (36:19.54)

million, five million, sometimes that next one really comes up quick at 10 or 12, just from what I've seen. These are just knuckle notes in my computer. Then you can probably get up to 25 or 30 from there. You'll have an established business. We look at revenue per employee and it should be right within a sweet spot there, you two to 220,000. That means they're efficient. They have the right amount of overhead. 

 

Ray (36:46.964)

you can you can squeeze a lot out of the business by running a very lean and mean but you can only do it for so long right and a lot of companies have very inefficient operations that they just make look good by throwing a high price on it so we look at that you know what what's their average price how do they compare the market so thirty thirty up to fifty sixty and then on from there you know there's there's still growth that but we usually see you can tell i mean i always say the the first level of complexity you know at the million dollar mark is mom or grandma 

 

Ray (37:17.312)

it's it's the wife or husband whatever if you know the spouse is the one that's doing all the office work that's doing the buildings the dispatching you know all roads lead through them that's a big level of complexity when you start hiring outside employees that you get and then you empower them as i say you know the things that we do we we engage we educate we empower and then we enable and that's a first level empowering other people in your organization at that million dollars to really start making decisions 

 

Ray (37:46.25)

in it so we can see those levels and what is attached to each one. 

 

Michael (37:50.488)

So in your industry, getting to a million dollars, you can do that as a solopreneur. You can do that with your wife doing the books, your grandma doing the books, so to speak, to get there. From there, you're talking about adding employees because you have to start scaling now. And that, when you add those people in there, you've got somebody else that's doing the jobs for you. You've got somebody else that's doing the billing. You're adding some marketing in there. You're starting to get a name for yourself. And now you hit five million. 

 

Michael (38:20.012)

What's happening there? What are the levels? What are the things that you're seeing at that five million mark for most businesses? 

 

Ray (38:25.762)

Yeah, mean, you go to Michael Gerber's, you know, that's an entrepreneur that has the entrepreneurial seizure and becomes a business owner and they realize that they need to bring in that manager. You got to bring in some level of mid-level management. It doesn't have to be a full-time $120,000 a year person. You should have somebody though that has that capability and the capacity to be that lead. So, you know, the bottleneck's at the top of the bottle. You are the bottleneck in your organization. You can only flow through it so much. 

 

Ray (38:55.756)

so you need to increase the width of that bottleneck and you do that with other people in the organization i think they get these are you know business rules according to ray which probably ninety nine percent wrong but they work for us in you know i think they can tell you make it but you know you get through that man 

 

Michael (39:12.846)

me stop for a second. So at that $5 million mark, what I'm seeing is the owner has to get out of their own way. And the way to do that is by bringing somebody in that can help you to manage. So basically, like if you were, a lot of people have heard of EOS, the Entrepreneur Operating System, or any of the other business coaching scaling up or metronomic. did scaling up. Matter of fact, I know your coach that you worked with, 

 

Ray (39:38.862)

yeah that was great 

 

Michael (39:41.696)

One of the things I want to point out is, you know, that is in every one of the business operating manuals that is out there, the operating systems, they all talk about the entrepreneur has to take their vision and then they need somebody to implement their vision. when you find that partner, that really takes a lot of pressure off you. For me and my business, I don't have that yet. I have myself with the vision and I have somebody who's the 

 

Michael (40:11.234)

direct opposite of me of getting all the things done in the back office, but she can't manage the whole practice, if that makes sense. so there's that, we need that go between that understands what happens in front of the client and what happens in the back office behind the curtain, so to speak. And that's what we're looking for right now is we're building our business. But so it's very, very common. 

 

Michael (40:39.03)

in every business, it doesn't matter whether you're heating and air conditioning or wealth management, multifamily office, you you're still running into the same issues as you're building the business. Skipping from five million to now you get to that 10 or $12 million mark, what are the hangups? What's happening? 

 

Ray (40:58.744)

again, world according to Ray, I mean, what you're describing is work, you go from working in the business to working on the business. So you and then you start building that team, you start building that next level. And it's, it's a little bit of bureaucracy, in a good way, you need levels. I mean, you go to the Marines, their model, what, no, no platoon was more than a certain number of 15, I think, you can only really be personally responsible for 15 direct reports. Sure. Six is probably optimal. 

 

Ray (41:28.15)

when you have that hand to hand collaboration and teamwork with that person. you start building. 

 

Michael (41:35.79)

called the pizza rule. No more people that can eat a large pizza. 

 

Ray (41:39.33)

Yeah, well, if my kids, would have been two people on a team. So, you know, that's so you start building that team. As I said in the very beginning, I was probably a terrible manager. I mean, if somebody told me right now to sit down and write a procedure manual, I would implode. I've got to lay down side ADD. I mean, I just can't do that. I was probably not a great leader. I always wanted to be a level five leader. But again, being a team builder, I think that was my skill. can always. 

 

Ray (42:05.708)

I just had a knack for recognizing talent in somebody even though they had a lot of maybe bad points and not in a personality. 

 

Ray (42:16.526)

abusive abrasive type personality, but maybe they weren't good with numbers and you know They I could always see past those and look for the good in them, know in Marcus Buckingham, you know Maximize, you know, don't look for the negatives. Everybody has them, you know, just maximize the the the positives Accentuate the positives in somebody and eliminate the negatives. So I always look for you know focusing on people's strengths and starting to build that and recognizing that and then empowering them giving them 

 

Ray (42:43.342)

you know that uh... opportunity our our vp of integrations now kidney jeremy knows that a fantastic job he's uh... with the holding company i took him with me when i got my position with the uh... with the partners uh... i brought him with me and i remember coming in one day when you service manager and he laid out this beautiful plan of what he wanted to do anything says well what do you think is a wall to pass what do you mean so it depends are are you asking me are you telling me he's not easily i guess i'm telling us a great let me know how it works out 

 

Ray (43:13.196)

And right there, those are the moments of truth. You need to be able to do that. And that's where I say on the four E's, empower and enable. Everybody gives people empowerment, but then they're very tentative and hesitant to enable them to be able to go out and act. I mean, the definition, it's micromanagement. 

 

Ray (43:36.13)

and people they'll realize they always well that's just a person that needs to be involved in everything now it's not always that it's where they'll empower somebody but then they constantly are needling that not doing check-ins constantly needling them and you know her did you do this did you do this did you do this you know you have to enable them give them chances to make mistakes and it's not perfect and it was another great i'm is you know i'm a fan of great books you know that they mean they've they can say things that i don't even you know know how to 

 

Ray (44:04.728)

put in words with trust and betrayal in the workplace. Great book. had one of our leaders once. Arabic. Right. And well, no, It was a woman that wrote it, but the basic premise of it was trust begets trust and trust begins with you. And I had one of our leaders once came in one day, says, the team doesn't trust me. I said, well, why? I don't know. I'm a trustworthy person. I give them memories and they trust me. I said, well, I know why it is. 

 

Michael (44:11.192)

your group. 

 

Ray (44:33.934)

why is that? said because they think or know whichever one is and perception is truth here they know that you don't trust them. I said you're not going to give somebody your trust if you know they don't trust you. said and I gave them the books that trust begets trust trust begins with you. They know that if you give them a job you're going to constantly not trust that they're going to be able to do it. And you know as a kind of a turning point there and that's you know you need to have that trust and that's the enablement. 

 

Ray (45:00.504)

part and then they are going to execute they're going to evolve and they're going to enjoy what they're if they're in a in the trusting relationship in the first dysfunction of a team absence of trust so we can can tie all these books together and they all kind of flow into one 

 

Michael (45:14.894)

Let's talk about that for just a second because I'm thinking about there are many family businesses that I know of that, you know, where the CEO or the family is able to get to that 30, 35, 40 million, $50 million, but they still have their fingers on everything. So when you see that, you know, what's typical for their transition process and their succession planning when, you know, 

 

Michael (45:44.48)

when the CEO or the president of the company or both control everything. 

 

Ray (45:49.814)

Yeah, that's a tough one because that's a personality trait. I have a buddy of mine and I said all roads lead through you. And he wonders, why am I having trouble? Why can't I get a good general manager? Because they're not a general manager. They're general, but they're not a manager. And you also need, and again, I always look at management and leadership very different. I never use the two combined. know, businesses, processes, procedures, policies, you know, those things, that's the things you manage. 

 

Ray (46:19.512)

but business is also another P, it's people. And never. And that's who you lead. And again, my dad, know, good quote from him. says, anytime you see the need or as soon as you see the need where you have to manage somebody, you've lost. So this person constantly is managing people. He's all roads lead through him. He is not empowering anybody. He has a trouble where every idea has to be his. 

 

Michael (46:22.859)

always. 

 

Ray (46:47.822)

Yes, and again, his ideas might be 100 % right, but good judgment comes from experience and experience comes from bad judgment. You need to give people the opportunity to build their own experience. you're so fearful of making a mistake or the business going backwards. You can't operate out of fear. You got to be okay. You got to have a skunkworks in your own company where, know, just, okay, write that off as marketing or training or education and be okay with that. So, 

 

Ray (47:15.374)

you know that we look at this we see companies were will go in and there are twenty or thirty million dollar company we ask one of the specific questions we ask the owner the seller is you know what do you do what what do you are responsible for where's your team we want to see the organizational chart you can read act at all you want to take out names you can take out everything just put in you know this smiley faces and what their title is but we want to see how many roads lead through them because it's gonna be tough we go in 

 

Ray (47:44.194)

We do an acquisition, even though we're gonna keep everything there the same, we still have some must haves. mean, obviously we're gonna transition their software system. We're gonna have policies, procedures, safety, things like that. And if Jeremy comes in with Jake, his guys, and they're gonna integrate them and try to maximize them, and this person is the biggest roadblock in the organization, that's gonna be a tough one. We head on, fortunately, just back away from a deal where a great company, great person, nothing wrong with the person. None of these are judges on people. 

 

Ray (48:13.218)

Yeah, it's no indictment on you as a person, lovely person that we're dealing with, but he's, all roads lead through him. It's just not going to be scalable. mean, you have to have that scalability. That's why I love the scaling up by Vern Harnas and then when we had Lynn help us through that, I I looked at EOS and it was great. I thought it went not beneath us, but we had already challenged those. We had visionaries, we had implementers, we had all those in our organization. I still use portions of that when we did ours, but the scaling up gives, 

 

Ray (48:42.382)

gives you that model for how you're going to scale this business to something that's going to be double in size. And fortunately, we're most of the companies we buy are sub $10 million in revenue, which is great. We love them. It's more work. It's a lot more effort. You got to put in as much effort. mean, a plane ticket to go see it. A hundred million dollar company is the same exact price as a plane ticket to go see a million dollar company. So that percent of revenue is, is greater, but we see such greater. 

 

Ray (49:11.726)

response to what we bring into the company and the things that we can help them maximize. So we like that, but we start looking at a very low level of, how many roads lead through these individuals? You got to get out of the way. Unless that's what you want to do, then okay, get out of the way of something else. You can't be everything in the organization. It's a law of diminishing returns. 

 

Michael (49:32.064)

Agreed. You hit on something I think that's really important that I want people to hear. You are the private equity group today. I mean, you're part of that group. And you're looking for partnerships with five million to $10 million companies on average. And the reason that they should be partnering with you is because 

 

Michael (49:59.598)

exactly what we talked about before is those levels of complexity. You can do this, you know, there's an old, I think it's an African proverb that says, want to go far, or you want to go fast, go alone. You want to go far, go together. And so you've been through all of these hurdles before and broke through them. And then also did the transition to private equity yourself. And so now you can partner with them to help them to see, look at 

 

Michael (50:29.318)

Here's you know, here's the systems and processes you don't have in place right now Here's what you're missing in terms of the leadership team. Here's you know what you need to do in terms of delivery and service and Man, how nice is that got to be for a lot of these people to be able to say? You know We were five million dollars Here we are. However, many years later and we quickly grew to you know, double that immediately because of that partnership 

 

Michael (50:59.526)

Um, what else? I mean, as I'm thinking, mean, that's the icing on the, that's the icing on the cake as far as I'm concerned is to have that piece, you know, with the private equity portion, do they still keep ownership in some of that? How does that, how does that work for them? 

 

Ray (51:17.166)

Okay, yeah, lot of great points. I should bring you out with us when we talk because that's exactly, we're different. And again, I see that we are different in our approach. We use a very pure group collaborative approach when we buy somebody. And I often, I said partner with more than I said buy. Because we are partnering with them. To answer your last question there, yes, we offer the opportunity. We like it when they roll over. Rolling over means you take a portion of your proceeds. There's another great book, the Private Equity Playbook. 

 

Michael (51:32.397)

Yes. 

 

Ray (51:46.318)

A gentleman that owned a heating and air conditioning business down in Atlanta wrote it and it explains all the elements, but he suggests in there 33 % of what you receive. if you get to $10 million, take 3.3 million and roll that back into the larger holding company. So they are now buying back in to the stock of the company that owns not only them, but every other company. Now it dilutes the existing shareholders, even though I'm an existing shareholder, my brothers and I all did that. That was one of our requirements when we sold with that we had the opportunity to roll over the old private equity. 

 

Ray (52:16.462)

adages, you why sell your company once when you can sell it two, three, four times. You're constantly, every time it sells then you're getting a return on that investment that you rolled back in. And it's risky, but that's, part of it. So that's why we say partner. And a lot of them do that. I think we're betting a thousand on that where everyone that has sold to us has either rolled over for them or for their team or both. My brothers and I did that. One of our requirements, we wanted our team to have an opportunity to finally own Isaac. And now they do. So our team. 

 

Ray (52:44.838)

team, were able to give them a portion of ownership because they're the ones that did a lot of the work to grow this company. So we do that. We are very collaborative though. We work with them to help them grow the business. And it's back to the true source of private equity. It used to be a company comes in, invest capital in your business to help you grow. And that's really what we're doing. Some private equity guys out there will come in and they will, on day one, they remove you. 

 

Ray (53:13.634)

they remove your senior leadership team. We don't understand what they're buying because they take great companies and we've seen some of them go backwards. So we're applying a very different approach. Not that their approach is bad. It's just we, it isn't right for us. They must have a bigger plan there. Yeah. So we want to make sure that we're very collaborative and we're 

 

Michael (53:30.765)

to the culture. 

 

Ray (53:38.91)

achieving best practices and economies of scale and that's how we're going to grow that's why we love the smaller businesses where we can take them from two million we can take them to four million we have an example right in one of our first acquisitions we did down in Binghamton we bought them they are over double their size now in less than three years we've doubled them and they there and we're not talking about businesses that are five years old some of these companies we have a company that we've bought that is the same age 79 years old same as Isaac 

 

Ray (54:07.046)

And we've already grown them more than what they've grown in their whole history. So, you know, that's our approach. Again, it's not that they weren't doing anything wrong. They just didn't know what they didn't know. And we helped them get to where the puck is going and bring in those best practices. And we're offering a smooth, thoughtful, intentional, integrated transition for them. As I said, nobody gets out of life. mean, life is too short. 

 

Ray (54:35.17)

We want them to enjoy this. We don't want them to think the day after that they made a mistake. We give our new partners, potential partners that we're looking to buy, we give them our full list of companies that we've bought, said, pick one. Just let us know which one you picked. We're gonna just let them know you're gonna call so they answer your questions. We'll just give them a heads up. But we give them the full list to call. Because we wanna use a very, again, a collaborative approach at the end of the day. And again, it's when I go back to how I... 

 

Ray (55:04.098)

tried to run Isaac was that look, you love what you do, you're never gonna work a day in your life. How many business owners out there are miserable every single day when they go into work? And I think we probably talked about this the last time and then they expect their employees to be happy and they're the most miserable SOB in the company. And SOB a lot of times is son of the boss. They're the miserable one in the company and they're expecting everybody else to be happy. there's another word for him, it's called hypocrite. So I do my keynote on that and it's called Never Work Day In Your Life and it really leads you through this journey of 

 

Ray (55:33.07)

you're the cancer in your organization a lot of times because you're miserable and all your employees see that. You create the entitlement because you drive in and you park in your private parking spot in the front row with your Maserati and you get out because God forbid you get any extra exercising. You want to be right by the front door. You have your private parking spots, the boats and all this, the lifestyle business stuff. we try to help a business do a nice smooth transition where they can nice coordinated approach and give them that 

 

Ray (56:02.606)

confidence that we are going to take care of the triple bottom line, their team, their clients, and their community. And that's the philosophy that Isaac always had was that, and they still do, we take care of those three bottom line, that those are the three important ones. And community is very important too. We don't make them change charities they give to. We don't even ask them. We look at a consolidated budget. Yeah, we'll help them coach through SG &A, but if they have a line item on there, they support their local charities. 

 

Ray (56:31.052)

Yes, keep doing that. Please keep going. Don't change that. So that's it's a different approach that we use. And maybe that comes from me and our team and our partners. mean, our P.E. partners. They are good people. And that's the big thing. They're good people. they, know, that was something I looked at. Are these good people? They're going to allow us to continue to do this or are they just Madison Avenue? Burn the city down when you leave type things. No, they. 

 

Ray (56:59.202)

they wanted we're creating a good company which were building a great company actually whether we sell again and that we're gonna have a great company 

 

Michael (57:06.542)

We've got a couple minutes left and we've talked about people and building teams. I'd like to, you know, and that's one of your specialties. So I'd like you to take a few minutes to talk about as you're developing a leadership team, if you're, you know, coaching somebody else to develop their leadership team, how do we know, you know, what are you looking for in leaders? And I know the three E's, the four E's that we talked about, but then what happens when... 

 

Michael (57:35.822)

How do know when they're not a fit? And how do you weed out to build that team? Because what I always tell CEOs is the people that you bring in front of me that is your leadership team today, a year from now, not all of them are going to be here. Because what we think is a good leader, at the end of the day when we're really trying to grow the business to the next level, get through that level of complexity, a lot of times people, being on the leadership team isn't the right fit. There's another great spot for them in the company. 

 

Michael (58:05.602)

How do you go about that process? 

 

Ray (58:08.248)

how much time we have? Google 

 

Ray (58:11.309)

leadership and you get back a million results. I guess I go back to the two I's, integrity or incompetence. You gotta look, okay, am I dealing with a good person and just needs a little bit of training and education or am I dealing with a prima donna? Yeah. 

 

Michael (58:25.472)

How 

 

Michael (58:25.763)

did you weigh the difference? I guess that's the question. 

 

Ray (58:29.39)

familiarity, obviously we always promoted, we tried to always promote from within. And again, Jim Collins talks about it in Good to Great. know, most of the Good to Great companies promoted from within. didn't, I mean, you look at Kodak, they brought in all these CEOs from outside. They didn't know the culture. They didn't know the organization. make dumb decisions, but I always tried to promote from within and we got a great team now. Senior VPs, Dominic and... 

 

Ray (58:53.194)

and wester doing a fantastic job the twenty five thirty year employees they were service tax for me you know so they've done a great job look at the science we profile we we would run them through a predictive index to and everybody had that on their doors i can tell exactly what i should be saying how i should be talking to somebody cuz their p i was right on their door are i'm a controller i mean that in the sense that i had to be in charge of everything but 

 

Ray (59:20.75)

i was kind of one the person give me a lot of info be collaborative in my decision-making but i'm gonna make the decision and whether you agree or disagree expected to get on board so that was my profile and i was okay i want people you want to look at people that are comfortable in their own skin again the first first level of leadership itself leadership being comfortable in your own skin being okay with who you are and a day of the young gentleman at the gym the other day as he says what your one 

 

Ray (59:47.348)

One item of advice, if you had no other advice you can give, what's your one item? I'm like, gee, I have probably no advice, but I said, be okay with who you are. You're gonna be a much better leader. If you're okay, the window in the mirror. To give credit, look out the window. Take blame, look in the mirror because it's not a reflection on your self-worth as an individual. So look for people who are okay, comfortable with their weaknesses, who are hungry, humble, and smart. The perfect team player. Before you can be a leader, you gotta be a good team player, and that's- 

 

Ray (01:00:15.714)

being that being a player is also synonymous with being a good manager coach they are a little different but you also got to be able to be a good team player having having the guts to make difficult decisions being okay being okay being okay with comfortable and comfortable with difficult conversations michael i was terrible at it it would keep me up for nights night have the conversation with somebody and they're consoling me 

 

Ray (01:00:44.002)

we got some leaders that Isaac are very good at having difficult conversations. That is a very important thing where you can present information. It's not judgmental, but it's fact-based. have little empathy, not sympathy, but you have empathy in it. So again, these are all those little elements that I guess in the stratosphere of leadership I always looked for. And that's just my approach. I'm sure there's much more gifted leaders out there. As I said, I'm not a very good leader. I was able to find people that work. So I built a team around that. 

 

Ray (01:01:13.772)

and everybody has skill, everybody has value. And people that, you always want those people, and I go back to, know, from there, John Engels, Advanced Leadership Competence, I was one of his first classes, I was in his class in 9-11, so that tells you how long, 23 years ago now. the main point in his was be a calming presence in an anxious environment. Be that, it doesn't mean that you're not anxious, doesn't mean you're not scared, I mean, you talk about, you know, 

 

Ray (01:01:44.28)

there's fear in everybody but you don't let it dictate you always take that third-person point of view on how you control your actions but be that calming presence in the anxious environment and every person on our team knew that and as a lot of them had been through this program but you know i'd tried to pay it forward with them and help them so you look at how people react always observe always watch look for the small stuff it's what i do now when i walk through a company i'm not looking at the billboards i'm looking at the corners 

 

Ray (01:02:13.196)

with no i had a couple of us really guys is that we run a very tight ship everything's clean and he would clean up every night and i looked at a box of sheet metal screws that it tipped over on the floor and they were scattered everywhere and they had dust on top of them and they were underneath i said before crap unit you don't clean this up because that's been on the floor as a dumb but i knew right then i said the guy's line to us he'd be clean the place up and he forgot that not only was he walking across it everybody else was walking across it i'm doing 

 

Ray (01:02:40.832)

integration meetings with new partners and i'm picking up sheet metal as i'm doing the presentation and employee call me out in your ability goes what he does it i was just force a heaven and picking up the sheet metal on the floor he gave them an indication of you know we we run a tight ship but you know you got a lead by example and and be the you know is abraham lincoln said you know morbid you know people a true leaders as some of these that people other be wanna follow even if it's out of morbid curiosity you they value you they trust you you know again the five assumptions of the team trust 

 

Ray (01:03:10.264)

conflict, commitment, accountability, and results. So you'll have those in an individual as much as in the team. 

 

Michael (01:03:18.478)

Accountability, think, is one of those ones that's always hard. It's those difficult conversations to keep them aligned and accountable to what they say they're going to do. I love that. 

 

Michael (01:03:29.236)

Ray Isaac, you and I could talk for about three more days. I think we're going to have to, a year from now, we'll tag you and do a whole thing on just leadership because you may say you're not a fantastic leader, but obviously you've done a great job of putting together a team. And that is one of the hardest things for a lot of CEOs to do. So I just want to say thank you for joining us today. Really appreciate your time. Any final words that you want to make sure that you get out? 

 

Ray (01:03:56.166)

No, just have fun, live life, enjoy it. Life's too short and on your dying day, is any of this going to matter? Is any of this going to matter? Yeah. Everything's going on in the world right now. Is it going to matter? You know, I think of relatives that I've lost and that's what changes you in your life is the losses. I lost my nephew, my sister's oldest boy at 18 years old. That changed me forever. was like, does any of this really matter? Enjoy life. 

 

Ray (01:04:25.518)

I lost my sister, his mom, a couple years ago at 59 years old, and I just lost my dad, grandparents, and father-in-law who I loved. mean, those are the things that you look at then and say, know, they're not worrying about these things. Unfortunately, I wish they were here to share, but none of this is going to matter. So enjoy life, and look at the political environment and what's going on in world. None of it matters. I mean, we've got an ultimate power that we answer to, so let's try to make him happy. 

 

Ray (01:04:55.374)

versus trying to make everybody else happy at this point. And you just have fun and be a good person. 

 

Michael (01:05:01.964)

1. Thank you for sharing everything. Appreciate everybody's time. Glad that you're all here again. I'm Michael Palumbos with Family Wealth and Legacy and you've been listening to the Family Biz Show. We can't wait to have you on the next episode and listening in. Thanks everybody. Have a great day and have fun out there and don't take it too seriously.