Author Topic: SYTE - Enterprise Diversified  (Read 222328 times)

gfp

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dwy000

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Re: SYTE - Sitestar
« Reply #241 on: October 06, 2016, 09:41:47 AM »
Roll ups of HVAC have been tried a number of times and nobody has cracked the code.  The problem is that they are largely mom and pops who's success is tied to an owner/manager who lives the business.  The customer relationships and employee loyalties are tied largely to that owner.  Once they sell out and move on, those relationships slowly dissipate and die - especially when employees are now reporting to an Area Manager and have to focus on budgeting and targets and other "corporate" metrics.  There are very few synergies with the exception of some systems and purchasing but those tend to take more effort to integrate than they achieve in savings.

Historically the play has been to buy the mom-and-pops at 3x EBITDA with a parent that trades at 5x EBITDA and get the value pop there.  But over time that EBITDA shrinks instead of growing and the whole thing dies slowly.

LowIQinvestor

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Re: SYTE - Sitestar
« Reply #242 on: November 09, 2016, 07:50:32 AM »

writser

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Re: SYTE - Sitestar
« Reply #243 on: November 09, 2016, 07:54:46 AM »
Respect: this is the perfect day to file that you issue stock way below market prices.
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Sunrider

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Re: SYTE - Sitestar
« Reply #244 on: November 09, 2016, 12:54:30 PM »
The people participating won't be able to transfer the shares (or sell them easily) for quite a long time.

Respect: this is the perfect day to file that you issue stock way below market prices.

writser

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Re: SYTE - Sitestar
« Reply #245 on: November 09, 2016, 01:17:06 PM »
I know. They probably didn't plan it this way :) .
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

rkbabang

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Re: SYTE - Sitestar
« Reply #246 on: November 16, 2016, 09:59:01 AM »

Foreign Tuffett

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Re: SYTE - Sitestar
« Reply #247 on: November 16, 2016, 08:42:05 PM »
Roll ups of HVAC have been tried a number of times and nobody has cracked the code.  The problem is that they are largely mom and pops who's success is tied to an owner/manager who lives the business.  The customer relationships and employee loyalties are tied largely to that owner.  Once they sell out and move on, those relationships slowly dissipate and die - especially when employees are now reporting to an Area Manager and have to focus on budgeting and targets and other "corporate" metrics.  There are very few synergies with the exception of some systems and purchasing but those tend to take more effort to integrate than they achieve in savings.

Historically the play has been to buy the mom-and-pops at 3x EBITDA with a parent that trades at 5x EBITDA and get the value pop there.  But over time that EBITDA shrinks instead of growing and the whole thing dies slowly.

Based on my (fairly limited) experience dealing with commercial HVAC companies, I agree with this 100%. The best managed companies are run by owner-operators who have worked in the business for decades and have long term customers built on personal relationships and customer trust in the owner's personal expertise and operational skill. The moat is the owner and without him/her the business would likely wither and die. Although I could very well be wrong, I see a rollup here as an uphill battle.





wachtwoord

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Re: SYTE - Sitestar
« Reply #248 on: November 17, 2016, 01:31:53 AM »
Roll ups of HVAC have been tried a number of times and nobody has cracked the code.  The problem is that they are largely mom and pops who's success is tied to an owner/manager who lives the business.  The customer relationships and employee loyalties are tied largely to that owner.  Once they sell out and move on, those relationships slowly dissipate and die - especially when employees are now reporting to an Area Manager and have to focus on budgeting and targets and other "corporate" metrics.  There are very few synergies with the exception of some systems and purchasing but those tend to take more effort to integrate than they achieve in savings.

Historically the play has been to buy the mom-and-pops at 3x EBITDA with a parent that trades at 5x EBITDA and get the value pop there.  But over time that EBITDA shrinks instead of growing and the whole thing dies slowly.

Based on my (fairly limited) experience dealing with commercial HVAC companies, I agree with this 100%. The best managed companies are run by owner-operators who have worked in the business for decades and have long term customers built on personal relationships and customer trust in the owner's personal expertise and operational skill. The moat is the owner and without him/her the business would likely wither and die. Although I could very well be wrong, I see a rollup here as an uphill battle.

So theoretically organizing it as BRK is organized stands a chance of succeeding (set of wholly owned businesses, with their original owner operators in-place, with mandate and with equity in the holding company). Excluding insurance of course.
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Spekulatius

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Re: SYTE - Sitestar
« Reply #249 on: November 17, 2016, 04:06:12 AM »
Roll ups of HVAC have been tried a number of times and nobody has cracked the code.  The problem is that they are largely mom and pops who's success is tied to an owner/manager who lives the business.  The customer relationships and employee loyalties are tied largely to that owner.  Once they sell out and move on, those relationships slowly dissipate and die - especially when employees are now reporting to an Area Manager and have to focus on budgeting and targets and other "corporate" metrics.  There are very few synergies with the exception of some systems and purchasing but those tend to take more effort to integrate than they achieve in savings.

Historically the play has been to buy the mom-and-pops at 3x EBITDA with a parent that trades at 5x EBITDA and get the value pop there.  But over time that EBITDA shrinks instead of growing and the whole thing dies slowly.

Based on my (fairly limited) experience dealing with commercial HVAC companies, I agree with this 100%. The best managed companies are run by owner-operators who have worked in the business for decades and have long term customers built on personal relationships and customer trust in the owner's personal expertise and operational skill. The moat is the owner and without him/her the business would likely wither and die. Although I could very well be wrong, I see a rollup here as an uphill battle.

So theoretically organizing it as BRK is organized stands a chance of succeeding (set of wholly owned businesses, with their original owner operators in-place, with mandate and with equity in the holding company). Excluding insurance of course.

Why would an owner work for somebody else after they sell out? I imagine they would no sell in the first place, unless there is an issue with the business or a special personal situation.
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