Speaker 1: Yeah, it's kind of interesting because our kind of equivalent
of that is, like the US is going through I
would say I'm manufacturing resurgence. I think COVID has shown
them that, like A, we can't have so much dependency
on other countries industries like aerospace and events. Fundamentally, they
can't make stuff in most countries. They can't send stuff
to China or Mexico and for certain products. And then
on top of that, like you know, the US typically
wants to invest locally, especially when they feel like the
economy is downe. So I'm a lot more mandates now
for made in America products.
Speaker 2: You are listening to Carrie.
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Speaker 4: And welcome you are listening to and watching the Financial
Survival Network. I'm your host, Carrie Lutz. Well, just when
you thought the rust belt was finally finished, along comes
Jewles Brenner. He's been taking these old rust built type
companies bringing him into the modern world, recapitalizing him, investing
in technology. He's going to tell you all about it, Jules.
Thank you for being on the show. So, hey, it's
kind of an interesting concept to find value in the
Ross belt. How long you've been doing it for?
Speaker 2: Heyay, thanks for having me.
Speaker 1: We're gone on our fifth year now. So we started
during COVID and you know we have been not gone
on ever since.
Speaker 4: All right, so give us an idea. What kind of
companies are you are you acquiring taking over?
Speaker 1: Yeah, so our main vision for our business was to
kind of look at the industrials pretty broadly. I think
the industrial economy in general is a very typically tech
under invested segment.
Speaker 2: A lot of children don't want.
Speaker 1: Those kinds of companies these days of parents have been
running every years of grandparents, and you know, there's a
lot of different opportunities to get into. You know, we
found our first initial footing in the metal fabrication sector,
particularly in California. When I talk about metal fabrication, think
like welding shops and machine shops. You know, anyone taking
metal and making custom shapes at it for customers. Typically
business to business, equipment, manufacturers, construction, et cetera. And you
know this sector of the economy, especially with companies call
it fifty employees you're down. There's thousands of them in California,
but also a lot of them unfortunately shut down, you know,
because kids don't want them, and then they never really
leverage modern tools to get to scale. So that's been
the current focus and will be for the next few years.
All right, So, I sorry, how many companies you've you
acquired to day?
Speaker 2: So we've about three and then in California alone there's
about six thousand of them, just metal fabrication businesses.
Speaker 4: And they're all companies with no direct or clear line
of succession and basically the kids don't want them for
whatever reasons, and so there's opportunity there. You're doing owner financing,
Are you getting bank loans or investor financing? How do
you do it?
Speaker 2: Yeah?
Speaker 1: And I would say many of them are you know,
like manufacturing for you know, kind of children succeeding their
parents is a lot more popular in the Midwest maybe
or different markets of the US, but really not in California.
And everyone's trying to be a software engineer or something
out of here, but yeah, a lot of them out
there and then on. You know, when we started, our
goal was to do a permanent hole model. So we
didn't want to start out and be like a private
equity group where we to raise a fund and then
the fund would force us to you know, sell it
in five to seven years. So we didn't think that
was you know, the appropriate strategy. We wanted to do
more long term investing. So what we did was we
use banks predominantly. You know, a lot of our sellers
they you know, want to have seller financing involved, sometimes
for tax purvices, sometimes because it gets them a higher
total price. And then we bring in equity ourselves, mostly
from our balance sheet from the existing businesses that we own,
as well some minority investors that we you know have
like minded and brought into the foal as well.
Speaker 4: Gotcha all right, So to tell us, how how has
it been going? Companies doing well?
Speaker 2: Yeah, company has been doing well.
Speaker 1: We started with a business initially in the infrastructure side.
It predominantly like custom parts for roads, bridges, and highways
in California. That was quite interesting for the first year
or two that we operated that on and sewing, and
then at the end of last year, we brought two
more businesses that were like five minutes from us that
brought us into like electronic enclosure industries as well as
water treatment.
Speaker 2: So you know, we love that.
Speaker 1: It's been a lot of fun to you know, look
at segments of the economy that you knew where someone
was making stuff for, but it's you know, you didn't
really know what it was like.
Speaker 2: So getting into that has been really exciting.
Speaker 1: And for the next like six months, our goal is
to get into aerospace and defense as well through both
purchasing in business and bringing some of that in organically.
Speaker 4: Interesting. Interesting So you like aerospace, are there other particular
markets you like?
Speaker 1: Yeah, I think, you know, we want to play to
what's successful in California. There are certain things like let's
say you're making like automotive parts. You know, there are
pockets of California what that may make sense for like
making things for maybe at Tesla or like a Ribbean
electric vehicles. But after that, a lot of that stuff
just makes a lot more sense in the Midwest. In California,
it's predominantly and historically an aerospace and defense hub. Water
treatment they call water the new goal that here there's
all the droughts to trying to create all this equipment
to treat water infrastructure. This is the largest infrastructure market
in the country, so it's been popular. Aybriculture is actually
also pretty popular here, especially at Central Valley, as well
as semi conductors and metical equipment, and we don't really
do much for any of those. We like aerospace and
defense because we are seeing just an influx of that work.
Every shop in our business campus that isn't that as
a metal shop is actually pretty much slammed at this
point with aerospace and defense works.
Speaker 2: So we think for the next few years it will
be a good place to start.
Speaker 4: That's funny because these are what I would call boring businesses,
although to me, no business is really boring. Maybe no
boring business is one that you don't have to do
anything in The money just pours in and you kind
of sit back and do nothing. But how many of
those are there? So they're really not glamorous, they're not sexy, right,
And yet these businesses are highly profitable, right, big margins,
and when you bring in the efficiencies like I'll give you.
For instance, here there's a dry cleaner around the corner
from me and it's elderly Indian as then from India couple,
and they still write out the slips by hand. The
biggest accomplishment was that they got a credit card reader
that actually took Apple then, you know, and I look
at it, and they actually do the actual cleaning on
the premises, and I look at it, and it's like
I want to say, like, why why aren't you using
like computers? Why do we have this here? And like
they don't barcode all the clothes the way the newer
dry cleaners do. And I'm thinking, you know, it's a
real opportunity for somebody. They're elderly, their kids probably don't
want to do it because I've never seen their kids.
There probably a great opportunity for somebody. Yeah.
Speaker 1: Yeah, it's interesting because some of those businesses, you know,
if the kids don't help the parents push technology. You know,
the parents typically we see most of our sellers like
fifty five and upper age and a lot of those
guys they've been doing things a certain way for decades,
so they don't particularly want to change, So the kids
aren't qushing change. It's pretty hard to give the business
to do all those things. So sometimes it's either, like
you said, easier to start from scratch or you have
to buy it and kind of do it yourself. But
they probably do have a nice recurring list of clientile
that is worth something over you know, buying to the
bus starting something from zero.
Speaker 4: Yeah, Like I go there because it's honestly, they do
a good job. All the years have been going only
one time if they something up and they fixed it,
and it's cheaper because you know, everything's paid for it. Sure,
all the equipment's probably falling apart as we speak, but
they do a decent job and it's cheaper, and they're
nice people. You know, they're nice people. But they like
when I see them take out the pen and they
have they can't just do one slip, Jiles. I got
to do two slips, one for the laundry, one for
the dry cleaning. So it's like I just look at
that and it's like, hey, I'll bet there's an app
for an iPhone that you could do this on and
it would take care of everything. But you know, it's
not my business. They didn't ask me, and I'm not
volunteering it, but I just so would like to ask them,
why are you doing it? I'm sure you encounter that
situation all the time.
Speaker 1: Yeah, it's kind of interesting because our kind of equivalent
of that is, like the US is going through I
would say, I'm manufacturing resurgence. I think COVID has shown
them like a, we can't have so much dependency on
other countries industries like aerospace and events. Fundamentally, they can't
make stuff in moost countries, they can't send stuff to
China or Mexico and for certain products. And then on
top of that, like you know, the US typically wants
to invest locally, especially when they feel like the economy
is down. So there's a lot more mandates now for
made in America products. But what's happening is our customers
are themselves in growth mode, and eventually, like if you
have a customer and growth mode with a supplier that's
not keeping up, eventually that customers going to have to
go somewhere else or move work to a different location
or whatever it is. So I think like our customers
are forcing us to make some of these tech changes
and some of these quality changes that maybe you don't
have to do so much in certain industries because you
know those and those industries aren't growing as much.
Speaker 4: Yeah, so you're basically your game plan here is do
a roll up. Keep acquiring these metal fabricators, put them
under one banner, bring efficiencies to them, bring new technology.
And it's interesting because I'm sure a lot of the
these guys been there doing this twenty thirty years. They're
probably really good at their jobs.
Speaker 2: Yeah.
Speaker 1: Yeah, it's you know, there's a lot of owners that
are like kind of general managers of these businesses, and
we typically see like, you know, a lot of difficulty
in them selling them as finding someone who can replace them.
Speaker 2: And the truth.
Speaker 1: Of the matter is very hard to replace somebody who's
been doing a lot of different things really well for decades.
But it's a lot easier to replace them if you
have like middle managers that specifically, you know, just purchase material,
just schedule, just do production, whatever, and you spread the owner's.
Speaker 2: Workload across them.
Speaker 1: So part of our strategies have the middle managers get
those owners' businesses, bring them in and spread them across
those That actually makes the transition smooth. But then the
other thing that's happening is like California, he gets a
pretty bad rap for you know, being hard to do
business in which I actually completely agree with. I think
it's very expensive to hire an employee for the office
and kind of do any of those things that it
will help you as a business owner scale And part
of the model here is if you can get to
scale and bring businesses together, not only do you diverse
revenue streams and spread workload across multiple people so it's
not all depend on one owner, but the actual the
California difficulty of doing business actually ends up becoming a
mote for you where it's very hard for mom and
pop to continue to compete with someone that's bigger because
you know, you just don't have the resources to it.
In customers, if they're growing, they're going to, you know,
increasingly want to move work to someone who has more
infrastructure built up internally to handle it. So I think
that's very important to our strategies, Like as you scale,
you get like exponentially you know, stronger from a force
to you know, to do a business in California.
Speaker 4: All right, Okay, well really interesting there, Hicks want to
find out more about you, connect with you on the web.
How do you do that?
Speaker 1: So you can go to Industrial Succession dot com, which
is our main hold Cone. If you want to learn
more about our metal orient and thesis, it's Metal Solutions
Holdings dot com. And we're always happy to talk to anyone,
whether it's enthusiasts in the space we've had, you know,
like my investors reach out, they'll want a partner with
us on some of the stuff.
Speaker 2: In Nest we had brokers.
Speaker 1: Sometimes people have owned the businesses themselves and are looking for,
you know, someone take them over.
Speaker 2: Please feel free to reach out on any of those channels.
Speaker 1: And it's just Jabrenner at on Industrial Subcession dot com.
Speaker 4: For all right, excellent hey links in the show notes
to this interview on Financial Survival Network dot com. You
got a question with Jewels or myself, shoot me an
email kl at Carrie Lets dot com. And while you're
on the site, please sign up for a free newsletter.
A lot of great info there, a lot of helpful
info that I guarantee will make you money. Jewel's been
a pleasure. Good luck on your endeavor.
Speaker 3: Hey key, thanks for listening to Carrie Let's this Financial
Survival Network your solution to today's trying times. For the latest,
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more than ever,