Bloomberg Audio Studios, Podcasts, Radio News.

Bloomberg Audio Studios, Podcasts, Radio News.

Hello and welcome to another episode of the Ad Thoughts Podcast. I'm Tracy Allaway.

Hello and welcome to another episode of the Ad Thoughts Podcast. I'm Tracy Allaway.

And I'm Joe Wisenthal.

And I'm Joe Wisenthal.

Joe, do you think it's fair to say it's been kind of kind of a quiet year for big deals. I think that's fair.

Joe, do you think it's fair to say it's been kind of kind of a quiet year for big deals. I think that's fair.

I feel you're like kind of a quiet year. Oh no, dot no for big deals. Yes, actually this has been kind of, you know, one of the big thematic surprises of twenty twenty five. Obviously when the new administration came in, like deals, and at least for now, I would say, largely you know, macro stuff, we actually have not gotten a big deals with so far.

I feel you're like kind of a quiet year. Oh no, dot no for big deals. Yes, actually this has been kind of, you know, one of the big thematic surprises of twenty twenty five. Obviously when the new administration came in, like deals, and at least for now, I would say, largely you know, macro stuff, we actually have not gotten a big deals with so far.

Right, the reason we haven't had that many deals is because there's been so much news arguably, right, there's all this uncertainty in the broader market. Yeah, people aren't really sure what they want to do if they want to risk it all. But that said, there is some stuff getting done, and in particular, there was recently a very very big deal, a blockbuster all cash deal, some have been saying, and it involves someone who's been on the show.

Right, the reason we haven't had that many deals is because there's been so much news arguably, right, there's all this uncertainty in the broader market. Yeah, people aren't really sure what they want to do if they want to risk it all. But that said, there is some stuff getting done, and in particular, there was recently a very very big deal, a blockbuster all cash deal, some have been saying, and it involves someone who's been on the show.

Before, a friend of the podcast.

Before, a friend of the podcast.

That's right. So Brad Jacobs, his new company, QXO, bought Beacon Roofing for I think it was eleven billion, is that right? So again, an all cash deal for eleven billion dollars in this market kind of notable. We should talk about it.

That's right. So Brad Jacobs, his new company, QXO, bought Beacon Roofing for I think it was eleven billion, is that right? So again, an all cash deal for eleven billion dollars in this market kind of notable. We should talk about it.

I love talking to Brad. We've talked to him a handful of times on the show. Often we've talked about his philosophy of buying companies, turning them around, turning them into billion dollar juggernauts. We talked to him about logistics and supply chains. But now we can talk about something specific on how he's going to turn one specific company around. So I'm excited exactly.

I love talking to Brad. We've talked to him a handful of times on the show. Often we've talked about his philosophy of buying companies, turning them around, turning them into billion dollar juggernauts. We talked to him about logistics and supply chains. But now we can talk about something specific on how he's going to turn one specific company around. So I'm excited exactly.

Okay, so let's get into the specifics. We have Brad Jacobs, billionaire founder of XPO, g XO, QXO, as I mentioned, basically all the XO companies plus United Waste, lots and lots, a serial entrepreneur, let's just put it that way. Brad, thank you so much for coming back on all lots. Trace is great to be here, all right, So congrats on the deal.

Okay, so let's get into the specifics. We have Brad Jacobs, billionaire founder of XPO, g XO, QXO, as I mentioned, basically all the XO companies plus United Waste, lots and lots, a serial entrepreneur, let's just put it that way. Brad, thank you so much for coming back on all lots. Trace is great to be here, all right, So congrats on the deal.

Thank you.

Thank you.

From what I understand, this has been in the works for quite a while and there was a lot of back and forth.

From what I understand, this has been in the works for quite a while and there was a lot of back and forth.

Yeah, so before we even did Beacon. We were looking at fifty five, as you know because I was on the podcast, looking at fifty five different industries and trying to pick the one that matches our skill set, that matches our playbook, the best, the things that worked for us at all the companies that you mentioned before. And then we settled on building products distribution because we liked it a lot, the size, the growth, the fragmentation, the opportunity to apply technology. And then we zeroed in on Beacon and we said, Beacon is the one that's that's the girl I want to marry Becon and we said, this is like a perfect match for what we do, and unfortunately they didn't want to sell, so we had to do a little hostile there. But we're past that and now we have a friend, the deal and really looking forward to closing it.

Yeah, so before we even did Beacon. We were looking at fifty five, as you know because I was on the podcast, looking at fifty five different industries and trying to pick the one that matches our skill set, that matches our playbook, the best, the things that worked for us at all the companies that you mentioned before. And then we settled on building products distribution because we liked it a lot, the size, the growth, the fragmentation, the opportunity to apply technology. And then we zeroed in on Beacon and we said, Beacon is the one that's that's the girl I want to marry Becon and we said, this is like a perfect match for what we do, and unfortunately they didn't want to sell, so we had to do a little hostile there. But we're past that and now we have a friend, the deal and really looking forward to closing it.

Tell us about Beacon, what is the actual assets that they have that you're acquaring.

Tell us about Beacon, what is the actual assets that they have that you're acquaring.

So Beacon's a distributor. It's a distributor of mostly roofing, but they also do waterproofing and other ancillary products, but it's mostly roofing. And what I like about that is everyone has a roof. The roof's not going anywhere they're not going into the metaverse. They're not going to weigh to AI. I mean, all structure is gonna need a roof, and there's gonna be more roofs needed next year, and the following year and the following year. In ten years now there's more, So there's underlying growth.

So Beacon's a distributor. It's a distributor of mostly roofing, but they also do waterproofing and other ancillary products, but it's mostly roofing. And what I like about that is everyone has a roof. The roof's not going anywhere they're not going into the metaverse. They're not going to weigh to AI. I mean, all structure is gonna need a roof, and there's gonna be more roofs needed next year, and the following year and the following year. In ten years now there's more, So there's underlying growth.

I love this simplicit everyone needs a roof. It's like, yeah, I actually can't argue with that. All right, keep going.

I love this simplicit everyone needs a roof. It's like, yeah, I actually can't argue with that. All right, keep going.

Not only does everyone need a roof, but everyone has to fix their roof every once in a while, so roofs break. You know, fifteen twenty years you need a new roof, and you have hurricanes and storms, and if your roof is leaking, it's not a discretionary choice. You have to fix the roof. So eighty percent of Beacon sales is non discretionary if someone needs to fix their roof. That's what I like about the business. It's a largely nondiscretion stuff foot print. The footprint is North America, so it's ninety seven percent United States of America, three percent in Canada. Almost everything is manufactured and sold in the US, and the stuff that's in Canada is manufactured for the most part, and so there's not a tariff issue. So it's an interesting business. It's a well positioned business.

Not only does everyone need a roof, but everyone has to fix their roof every once in a while, so roofs break. You know, fifteen twenty years you need a new roof, and you have hurricanes and storms, and if your roof is leaking, it's not a discretionary choice. You have to fix the roof. So eighty percent of Beacon sales is non discretionary if someone needs to fix their roof. That's what I like about the business. It's a largely nondiscretion stuff foot print. The footprint is North America, so it's ninety seven percent United States of America, three percent in Canada. Almost everything is manufactured and sold in the US, and the stuff that's in Canada is manufactured for the most part, and so there's not a tariff issue. So it's an interesting business. It's a well positioned business.

And what do you plan to do with it now that you have it.

And what do you plan to do with it now that you have it.

I'm going to double the profit the same thing we do, the same thing we did at Conway, at XPO, we double the profits in three years. Same thing we did with norber Dontresongle in Europe, which is a very well managed premier company there. We double the profits again in three years. We're gonna apply the same playbook. We're going to start with communicating and talking to all the people. And we announced the deal on Thursday morning, and at eleven o'clock we had an all employees zoom and I had the privilege and the honor and just the wonderful experience of doing the zoom with thousands and thousands of Beacon employees. And it was less me lecturing and giving a speech and more asking questions and starting to learn the business.

I'm going to double the profit the same thing we do, the same thing we did at Conway, at XPO, we double the profits in three years. Same thing we did with norber Dontresongle in Europe, which is a very well managed premier company there. We double the profits again in three years. We're gonna apply the same playbook. We're going to start with communicating and talking to all the people. And we announced the deal on Thursday morning, and at eleven o'clock we had an all employees zoom and I had the privilege and the honor and just the wonderful experience of doing the zoom with thousands and thousands of Beacon employees. And it was less me lecturing and giving a speech and more asking questions and starting to learn the business.

I'm really curious this wasn't officially a hostile takeover, although as you mentioned it was, parts of it were hostile ish, let's say hostile adjacent. So when you come into a company like that that initially resisted your overtures for marriage. As you put it, does that make it difficult to actually start to integrate this, start to change the business model? What is the relationship actually like with the workers?

I'm really curious this wasn't officially a hostile takeover, although as you mentioned it was, parts of it were hostile ish, let's say hostile adjacent. So when you come into a company like that that initially resisted your overtures for marriage. As you put it, does that make it difficult to actually start to integrate this, start to change the business model? What is the relationship actually like with the workers?

Well, it does make it a harder start for about ten seconds, but after everyone realizes, Okay, this is done. We're buying, we're married, we're getting married here, we're engaged. We have to make this work. That's history, that's past, and the resistance is more on the senior levels. I've been doing zooms since that Thursday. All employees zoom. One of the reasons, well, the only reason my voice is horse is because I've been doing NonStop zooms. I've been doing zooms with fifteen or twenty branch managers and salespeople and others at a time for an hour two hours, learning the business and reaching out and really understanding two things, which are one, what's going great in the company that we'd be crazy to change, Like help us understand, like what's the strengths of the company that is fantastic. You know, it's a ninety seven year old company, it's a serious company. What are the good things about it there that we got to keep? And then the second question is what can we improve what can we do better? What are your needs? What are your gaps? How can we help you? And we try to keep it simple, and all these zooms and town halls we're having, we're trying to just ask those two questions. And we sound a survey to every employee at Beacon who has an email address, and we ask them those two questions. We asked them, what's working really well and what's your single best idea to improve the company. We're going to read all those thousands of responses and we ask them another question. We ask them rate your job satisfaction on a scale of one to ten, with ten being the most one being the least, and we track that. So that's the baseline. So we're going to keep surveying the employees and figure out are we doing our job in terms of making people happy. Are we doing our job of making people want to come into work every day and really loving being part of this organization. And if we take care of that, if we get them a rale up, if we get the engagement up, usually everything else falls in place.

Well, it does make it a harder start for about ten seconds, but after everyone realizes, Okay, this is done. We're buying, we're married, we're getting married here, we're engaged. We have to make this work. That's history, that's past, and the resistance is more on the senior levels. I've been doing zooms since that Thursday. All employees zoom. One of the reasons, well, the only reason my voice is horse is because I've been doing NonStop zooms. I've been doing zooms with fifteen or twenty branch managers and salespeople and others at a time for an hour two hours, learning the business and reaching out and really understanding two things, which are one, what's going great in the company that we'd be crazy to change, Like help us understand, like what's the strengths of the company that is fantastic. You know, it's a ninety seven year old company, it's a serious company. What are the good things about it there that we got to keep? And then the second question is what can we improve what can we do better? What are your needs? What are your gaps? How can we help you? And we try to keep it simple, and all these zooms and town halls we're having, we're trying to just ask those two questions. And we sound a survey to every employee at Beacon who has an email address, and we ask them those two questions. We asked them, what's working really well and what's your single best idea to improve the company. We're going to read all those thousands of responses and we ask them another question. We ask them rate your job satisfaction on a scale of one to ten, with ten being the most one being the least, and we track that. So that's the baseline. So we're going to keep surveying the employees and figure out are we doing our job in terms of making people happy. Are we doing our job of making people want to come into work every day and really loving being part of this organization. And if we take care of that, if we get them a rale up, if we get the engagement up, usually everything else falls in place.

Whether it was your initial due diligence sort of discovering Beacon or in your zoom's post acquiring Beacon. What are the weaknesses that you believe you.

Whether it was your initial due diligence sort of discovering Beacon or in your zoom's post acquiring Beacon. What are the weaknesses that you believe you.

Confess So I don't like the word weakness. Okay, what are the opportunity? Thanks. That's a subtle reforming, but it's important one because you don't want to go into a company and demortalize. People say what's wrong with you? You want to you want to talk about where can we do better? It's working, Okay.

Confess So I don't like the word weakness. Okay, what are the opportunity? Thanks. That's a subtle reforming, but it's important one because you don't want to go into a company and demortalize. People say what's wrong with you? You want to you want to talk about where can we do better? It's working, Okay.

We can do better under your under your management.

We can do better under your under your management.

So the honest answer is I have a lot of hypotheses. I have a lot of ideas of things that have worked in the other companies that we've run, and this so well. But I don't totally know yet such as I'm going to do. But I will know in a month from now. And the reason I'm going to note for a month from now is we're going to get the input from thousands of thousands of Beacon employees who are in the game every day and have been in the running. So I was on a zoom with branch managers yesterday from the Northeast where I grew up, and some of those branch managers were there for thirty years, thirty five years, and we say they're very long in the tooth in this business. They get it. They've been through all the trials and tribulations, they've run the business in good times and bad times, et cetera. I'm learning from them, so we're going to modify it. But let me ask you a question. So when we go into a company, so, how did we double the profits of Conway? How do we double the profits at Norbear? It starts with the people. It starts with creating an atmosphere, a culture, a vibe in the organization where people genuinely, sincerely feel their value, they're respected, they're part of it, they're an important part of it, and they're an essential part of it. And that there's feedback loops. There's two way communication between us and every part of the organization. So we're very highly self aware organization. That's very critical. That's really the first step. The second step is figuring out okay, So like Beaking, for example, has a little over eight thousand employees who wants to stay so well, Annette will get all this input from everybody from all the town halls and the zooms and the surveys, and then we'll give a first iteration of what we heard and what we think we should do to double the profits of the company, and then we'll get more feedback and we'll get more iteration, and then we'll have a final, final plan that'll be the plan. Then we ask everybody, are you on board? Do you like the plan? Is this something you have your heart into. Is this something you want to spend your next many years of your life doing. Is this something that gets you inspired and motivated and uplifted and engaged. And if so, come out on the pool. Let's join the party. And if it's something like you know, I don't want to be part of a high performance culture. I don't want to move that fast, well.

So the honest answer is I have a lot of hypotheses. I have a lot of ideas of things that have worked in the other companies that we've run, and this so well. But I don't totally know yet such as I'm going to do. But I will know in a month from now. And the reason I'm going to note for a month from now is we're going to get the input from thousands of thousands of Beacon employees who are in the game every day and have been in the running. So I was on a zoom with branch managers yesterday from the Northeast where I grew up, and some of those branch managers were there for thirty years, thirty five years, and we say they're very long in the tooth in this business. They get it. They've been through all the trials and tribulations, they've run the business in good times and bad times, et cetera. I'm learning from them, so we're going to modify it. But let me ask you a question. So when we go into a company, so, how did we double the profits of Conway? How do we double the profits at Norbear? It starts with the people. It starts with creating an atmosphere, a culture, a vibe in the organization where people genuinely, sincerely feel their value, they're respected, they're part of it, they're an important part of it, and they're an essential part of it. And that there's feedback loops. There's two way communication between us and every part of the organization. So we're very highly self aware organization. That's very critical. That's really the first step. The second step is figuring out okay, So like Beaking, for example, has a little over eight thousand employees who wants to stay so well, Annette will get all this input from everybody from all the town halls and the zooms and the surveys, and then we'll give a first iteration of what we heard and what we think we should do to double the profits of the company, and then we'll get more feedback and we'll get more iteration, and then we'll have a final, final plan that'll be the plan. Then we ask everybody, are you on board? Do you like the plan? Is this something you have your heart into. Is this something you want to spend your next many years of your life doing. Is this something that gets you inspired and motivated and uplifted and engaged. And if so, come out on the pool. Let's join the party. And if it's something like you know, I don't want to be part of a high performance culture. I don't want to move that fast, well.

Then you know it sounds like you have an intuition that the business could run as well as it is without as many employees as it has.

Then you know it sounds like you have an intuition that the business could run as well as it is without as many employees as it has.

Well, I don't know that yet.

Well, I don't know that yet.

I mean it sounds like that's sort of what's implies. I never want to he really wants to stay.

I mean it sounds like that's sort of what's implies. I never want to he really wants to stay.

No, no, no, I want to be clear about this. It's a mistake for me if I would go into a company that I bought with final conclusions before I have the information. And most of the time you can pair back the headcount mostly in the mid and upper not in the field. The field often is understaffed because companies do these rifts, they do these reductions in force, which basically is a HR speak for firing people, and they bear the brunt of the cutbacks. And sometimes you have to actually add people. You don't have enough salespeople, you don't have enough drivers, you don't have enough of basic functions. But we're not a private equity firm that goes in and just slashes and burns to try to get short term profit improvement, because that doesn't work, that's not sustainable long term. There'll be places where we need to add, there'll be places we need to subtract, and we will look. We will do a zero based, blank slate analysis of every single position, every single person, every single function, to say, is this a headcount that we must have, Like we need safety people, like, you can't cut back safety people. Is this you need a branch manager? They have six hundred branches almost, so they need six hundred branch managers. You can't reduce branch managers. So or is this something that's a nice to have, so then you know, if we have some big extra profits, maybe we can have this. But and then the third category is like we really don't need this. Somehow Goold got into the organization really doesn't belong there. And then we'll modify the organization structure. Now I don't know. I really don't know whether that'll be a radical restructuring or a minor restructuring almost nothing. I don't know yet. We got to get into it. We've been outside in until last Thursday. But we'll find out. So they answer you your earlier question. So people is the first thing. We figure out what is the plan? Who wants to be part of this? Then we figure out, okay, what are the levers, what are the steps, what are the things we got to do in order to double the profits? And then who's going to be in charge of what? And then we take the compensation programs and we align the incentives to achieving those metrics for very objective, very concrete things, so that once we know the plan and we know the levers, we can attach owners to different levers and pay them if they succeed. This is the most satisfying thing to be paying huge bonuses because the only way you're paying those huge bonuses is if you're succeeding. So that's what we're trying to do. We're trying to win. So the first step is all this people's stuff, all the people's stuff. The second step is the actual blood and guts of the business. So we're a distributor. Beacon is in the middle between a manufacturer who makes shingles and other building products, and on the other side the general contractors and the home builders who buy these things. So when you just step back and look at the business model, it's a pretty simple supply chain. So what do you have to do. You have to figure out a way that you can optimize your procurement. You have to go to your vendors and say you can't just go to your vendors and say, hey, give me exp percent discount. They're going to say, well, like why, like why should they give you better tothing? So you have to really understand what would they value, what would the OEMs, the original equipment manufacturers, what would they appreciate, and what would help them save money so you earn a lower price, you get a bigger rebate. And so for instance, United Rentals when it bought United Rentals, we started buying hundreds of companies. We went to the manufacturers of the skid steers and the generators and white towers and so forth, and we said, what do we got to do to get big discounts on the price, because we really want you know, we're bigger. How can we get a bigger discount? And they said, well, one thing you could do is you could consolidate your vendor base so that you know, you have bigger orders with us. And the other thing you could do is you give us more advanced notice that we can plan more because that would save them cost. And so we said, good, that's a great partnership. We reduced all those vendors, so for instance, area lifts and booms, the scissors, we reduced it down to two Genie and JLG. I think they're still the only two main vendors for aeral listing, not of rentals twenty something years later. So we got big discs counts and the manufacturers like, do this. We're gonna have to do a similar process with the manufacturers here. And then you have on the other end of the equation selling. So we're selling all those to customers. Are we pricing them right? Are we pricing it methodically scientifically? Are we using algorithms? Are we using technology to figure out elasticity to figure out if we raise pricing, this is how much business will lose, but this is what we'll do to profit. If we lower pricing, this is how much we will increase volume with. This is due to profit and so forth. And the third category of stuff to do, Joe is everything in the middle. Making sure our cost structure is appropriate, not too lean, but not excessive.

No, no, no, I want to be clear about this. It's a mistake for me if I would go into a company that I bought with final conclusions before I have the information. And most of the time you can pair back the headcount mostly in the mid and upper not in the field. The field often is understaffed because companies do these rifts, they do these reductions in force, which basically is a HR speak for firing people, and they bear the brunt of the cutbacks. And sometimes you have to actually add people. You don't have enough salespeople, you don't have enough drivers, you don't have enough of basic functions. But we're not a private equity firm that goes in and just slashes and burns to try to get short term profit improvement, because that doesn't work, that's not sustainable long term. There'll be places where we need to add, there'll be places we need to subtract, and we will look. We will do a zero based, blank slate analysis of every single position, every single person, every single function, to say, is this a headcount that we must have, Like we need safety people, like, you can't cut back safety people. Is this you need a branch manager? They have six hundred branches almost, so they need six hundred branch managers. You can't reduce branch managers. So or is this something that's a nice to have, so then you know, if we have some big extra profits, maybe we can have this. But and then the third category is like we really don't need this. Somehow Goold got into the organization really doesn't belong there. And then we'll modify the organization structure. Now I don't know. I really don't know whether that'll be a radical restructuring or a minor restructuring almost nothing. I don't know yet. We got to get into it. We've been outside in until last Thursday. But we'll find out. So they answer you your earlier question. So people is the first thing. We figure out what is the plan? Who wants to be part of this? Then we figure out, okay, what are the levers, what are the steps, what are the things we got to do in order to double the profits? And then who's going to be in charge of what? And then we take the compensation programs and we align the incentives to achieving those metrics for very objective, very concrete things, so that once we know the plan and we know the levers, we can attach owners to different levers and pay them if they succeed. This is the most satisfying thing to be paying huge bonuses because the only way you're paying those huge bonuses is if you're succeeding. So that's what we're trying to do. We're trying to win. So the first step is all this people's stuff, all the people's stuff. The second step is the actual blood and guts of the business. So we're a distributor. Beacon is in the middle between a manufacturer who makes shingles and other building products, and on the other side the general contractors and the home builders who buy these things. So when you just step back and look at the business model, it's a pretty simple supply chain. So what do you have to do. You have to figure out a way that you can optimize your procurement. You have to go to your vendors and say you can't just go to your vendors and say, hey, give me exp percent discount. They're going to say, well, like why, like why should they give you better tothing? So you have to really understand what would they value, what would the OEMs, the original equipment manufacturers, what would they appreciate, and what would help them save money so you earn a lower price, you get a bigger rebate. And so for instance, United Rentals when it bought United Rentals, we started buying hundreds of companies. We went to the manufacturers of the skid steers and the generators and white towers and so forth, and we said, what do we got to do to get big discounts on the price, because we really want you know, we're bigger. How can we get a bigger discount? And they said, well, one thing you could do is you could consolidate your vendor base so that you know, you have bigger orders with us. And the other thing you could do is you give us more advanced notice that we can plan more because that would save them cost. And so we said, good, that's a great partnership. We reduced all those vendors, so for instance, area lifts and booms, the scissors, we reduced it down to two Genie and JLG. I think they're still the only two main vendors for aeral listing, not of rentals twenty something years later. So we got big discs counts and the manufacturers like, do this. We're gonna have to do a similar process with the manufacturers here. And then you have on the other end of the equation selling. So we're selling all those to customers. Are we pricing them right? Are we pricing it methodically scientifically? Are we using algorithms? Are we using technology to figure out elasticity to figure out if we raise pricing, this is how much business will lose, but this is what we'll do to profit. If we lower pricing, this is how much we will increase volume with. This is due to profit and so forth. And the third category of stuff to do, Joe is everything in the middle. Making sure our cost structure is appropriate, not too lean, but not excessive.

You know, I mentioned in the intro that it's been relatively quiet for M and A and deals so far this year. I think volumes are act up slightly, but certainly we have not seen the deal boom that a lot of people were expecting with the new administration. When you announced your deal, you said you already have antitrust clearance from both the US and Canada. I'm curious what's the general vibe from this administration when it comes to deal making versus previous administrations. I know you have a very very long history of doing deals and you've seen lots of different administrations come and go. What was it like this time around.

You know, I mentioned in the intro that it's been relatively quiet for M and A and deals so far this year. I think volumes are act up slightly, but certainly we have not seen the deal boom that a lot of people were expecting with the new administration. When you announced your deal, you said you already have antitrust clearance from both the US and Canada. I'm curious what's the general vibe from this administration when it comes to deal making versus previous administrations. I know you have a very very long history of doing deals and you've seen lots of different administrations come and go. What was it like this time around.

My teams and I have done over five hundred acquisitions. We've never had one deal blocked. We've had a deal here there with regulars. They why don't you promise not to raise pricing on this category of customer, or we can you divest this little part of the business. But generally speaking, we haven't had a problem with that here. It was very easy to get anti trust clearance. And by the way, it was with the previous administration that because we don't have any we don't have any existing distributor, so it's not like we had a bit we had a roofing distributor and buying a roof and distributor, and now we're going to get twice the markets here in the market where we're entering it for the first time. So there really weren't any antitrust considerations.

My teams and I have done over five hundred acquisitions. We've never had one deal blocked. We've had a deal here there with regulars. They why don't you promise not to raise pricing on this category of customer, or we can you divest this little part of the business. But generally speaking, we haven't had a problem with that here. It was very easy to get anti trust clearance. And by the way, it was with the previous administration that because we don't have any we don't have any existing distributor, so it's not like we had a bit we had a roofing distributor and buying a roof and distributor, and now we're going to get twice the markets here in the market where we're entering it for the first time. So there really weren't any antitrust considerations.

What is it about the nature of roofing supplies such that they're still domestically made. It seems pretty good that you're entering a business in which tariff risk isn't going to be much of a risk factor for the business. Why are roofing supplies still in twenty twenty five more or less built where they're used?

What is it about the nature of roofing supplies such that they're still domestically made. It seems pretty good that you're entering a business in which tariff risk isn't going to be much of a risk factor for the business. Why are roofing supplies still in twenty twenty five more or less built where they're used?

You know, it's just the way it worked out. It worked out over time that American manufacturers figured out a way even though we have higher labor costs than overseas countries to produce singles that the American consumer wanted, which is a little bit different. You go country to country in Europe, even they have different specs for the shingles. You go in Age, they have different specs because there's different environments, there's different climates, there's different cultural there's different appearances, there's different colors and textures and so forth. And American manufacturers did a real good job at that. Now maybe that's a good model. Maybe that's a good model for other manufacturing that went overseas over the last few decades that maybe those manufacturers need up their game and figure out what is it that's our specially, what's our strength. What is it that even with higher labor costs here in the United States, we can please the customer more. And the other advantage of American manufacturers selling in America is you don't have all this transportation costs. It costs a lot of money to move goods thousands of thousands of miles, and you also have shorter lead times because you're right here. So I actually am bullish about American manufacturing. I think American manufacturing fast forward five years from now, ten years from I think it's been a lot more here on shore.

You know, it's just the way it worked out. It worked out over time that American manufacturers figured out a way even though we have higher labor costs than overseas countries to produce singles that the American consumer wanted, which is a little bit different. You go country to country in Europe, even they have different specs for the shingles. You go in Age, they have different specs because there's different environments, there's different climates, there's different cultural there's different appearances, there's different colors and textures and so forth. And American manufacturers did a real good job at that. Now maybe that's a good model. Maybe that's a good model for other manufacturing that went overseas over the last few decades that maybe those manufacturers need up their game and figure out what is it that's our specially, what's our strength. What is it that even with higher labor costs here in the United States, we can please the customer more. And the other advantage of American manufacturers selling in America is you don't have all this transportation costs. It costs a lot of money to move goods thousands of thousands of miles, and you also have shorter lead times because you're right here. So I actually am bullish about American manufacturing. I think American manufacturing fast forward five years from now, ten years from I think it's been a lot more here on shore.

Your initial takeover target, though, was a company called Rexul, which I think is a French electric equipment supplier. Is that right, okay? And they said no, they rejected you, and you've moved on pretty quickly. Why did you change your minds on that one? Is it the case that French companies are harder to buy than American ones or are you worried perhaps about how tariffs would impact that business versus something like roofing.

Your initial takeover target, though, was a company called Rexul, which I think is a French electric equipment supplier. Is that right, okay? And they said no, they rejected you, and you've moved on pretty quickly. Why did you change your minds on that one? Is it the case that French companies are harder to buy than American ones or are you worried perhaps about how tariffs would impact that business versus something like roofing.

Well, we never confirmed that we were talking to that company publicly. Somehow some reporter got that through journalism. But when we were reportedly looking at that French based company, which has a lot of its biggest countries the United States. Actions, when we were looking at that, we're reportedly looking at that. This was still in the previous administration. There wasn't tariffs wasn't really in the air, So it really wasn't about terriffs. It wasn't that some other company was not good. The company mentions actually a really good company and has great prospects. But Beacon was perfect for us. I mean, Beacon is absolutely perfect for our particular skill set, the kind of things we do to increase the profits of a company. This applies to Beacon, which is why I did, which I is something I've only done once before in my life out of more than five hundred acquisitions, which is I did an unsolicited a takeover. We proposed an alternative slate, and we did a proxy solicitation, and it was because it was such a good match. It was a match made in heaven that we should just not run away from.

Well, we never confirmed that we were talking to that company publicly. Somehow some reporter got that through journalism. But when we were reportedly looking at that French based company, which has a lot of its biggest countries the United States. Actions, when we were looking at that, we're reportedly looking at that. This was still in the previous administration. There wasn't tariffs wasn't really in the air, So it really wasn't about terriffs. It wasn't that some other company was not good. The company mentions actually a really good company and has great prospects. But Beacon was perfect for us. I mean, Beacon is absolutely perfect for our particular skill set, the kind of things we do to increase the profits of a company. This applies to Beacon, which is why I did, which I is something I've only done once before in my life out of more than five hundred acquisitions, which is I did an unsolicited a takeover. We proposed an alternative slate, and we did a proxy solicitation, and it was because it was such a good match. It was a match made in heaven that we should just not run away from.

Yes, speaking of this, so you raised your offer right after the initial rejection. And right now I am looking at a chart of shares of a company called James Hardy. It's an Australian company and they just announced that they were buying something and their stock has tanked because people are worried that they've overpaid for a US asset in the current environment. Do you worry at all that you've overpaid after adding on you know, pretty decent premium.

Yes, speaking of this, so you raised your offer right after the initial rejection. And right now I am looking at a chart of shares of a company called James Hardy. It's an Australian company and they just announced that they were buying something and their stock has tanked because people are worried that they've overpaid for a US asset in the current environment. Do you worry at all that you've overpaid after adding on you know, pretty decent premium.

Well, I'm not in the reads that deal because that's the manufacturers and I'll follow it as closely, but from what I've read, it looks like they paid something like nineteen times ibadah and we paid ten and a half times eb DA. So if you pay very high multiples for companies, you know that affects yourholder value. Now I'm not condemning that deal because I'm not knowledge enough to condemn it, but generally speaking, the price you pay matters. It matters a lot because the ROIC return on investing capital for acquisitions, the IC is the purchase price, and if you have a high purchase price, that lowers the ROI C. Your stock price is a function of your return on capital. Investors give you money debt and equity. Now you got to get a return on that. And if you overpay for acquisitions, and I'm not saying they did because I don't know enough about it, but if you're perceived to be overpaying, then you know your stock's going to go down.

Well, I'm not in the reads that deal because that's the manufacturers and I'll follow it as closely, but from what I've read, it looks like they paid something like nineteen times ibadah and we paid ten and a half times eb DA. So if you pay very high multiples for companies, you know that affects yourholder value. Now I'm not condemning that deal because I'm not knowledge enough to condemn it, but generally speaking, the price you pay matters. It matters a lot because the ROIC return on investing capital for acquisitions, the IC is the purchase price, and if you have a high purchase price, that lowers the ROI C. Your stock price is a function of your return on capital. Investors give you money debt and equity. Now you got to get a return on that. And if you overpay for acquisitions, and I'm not saying they did because I don't know enough about it, but if you're perceived to be overpaying, then you know your stock's going to go down.

You're comfortable with the forty percent premium that you paid.

You're comfortable with the forty percent premium that you paid.

I love the price we paid. I think the price we paid is a is a fair price. It's it's not a terribly low price, but it's certainly not a high price. And this is a price that when you're paying ten and a half times ebitdah, and that's before you double the ebadah, you know you're paying, like you know, mid single digits ebudah for a nice business that's growing, it's got long term growth to it. That eighty percent of it is nondiscretionary, that's terriff im unit and is the main reason why out of the fifty five different industries we looked at, we pick building products distribution, which is this is an industry that's got growth to it because there's a shortage of something like four million homes in the United Sates States. That's a big shortage, and it's one of the few things that both Democrats and Republicans completely agree on that we need to solve this housing crisis. This housing shortage has to be sold, so there's going to be more construction. It'll be cyclical, but over the long term arc is going to be more and more bildy. And then they're old. They're old. There's forty million homes that are over forty years old. By the way, they're all going to need to change their roofs. They're all what's called prospective customers for this business. So it's exposed to growth just for showing up and being in the game. And that's a good thing because you can do a thousand things right, but if the underlying trend is in your faces, coming the wrong way. It's tough Joe.

I love the price we paid. I think the price we paid is a is a fair price. It's it's not a terribly low price, but it's certainly not a high price. And this is a price that when you're paying ten and a half times ebitdah, and that's before you double the ebadah, you know you're paying, like you know, mid single digits ebudah for a nice business that's growing, it's got long term growth to it. That eighty percent of it is nondiscretionary, that's terriff im unit and is the main reason why out of the fifty five different industries we looked at, we pick building products distribution, which is this is an industry that's got growth to it because there's a shortage of something like four million homes in the United Sates States. That's a big shortage, and it's one of the few things that both Democrats and Republicans completely agree on that we need to solve this housing crisis. This housing shortage has to be sold, so there's going to be more construction. It'll be cyclical, but over the long term arc is going to be more and more bildy. And then they're old. They're old. There's forty million homes that are over forty years old. By the way, they're all going to need to change their roofs. They're all what's called prospective customers for this business. So it's exposed to growth just for showing up and being in the game. And that's a good thing because you can do a thousand things right, but if the underlying trend is in your faces, coming the wrong way. It's tough Joe.

As proof of concept of Brad's business plan, I took delivery yesterday, my husband and I of a bunch of roof shingles always love. Update was, Yeah, there we go because our insurance company says we have to replace the roof on our barn. So literally, you know, we have to have roofs and we have to do what the insurance company says.

As proof of concept of Brad's business plan, I took delivery yesterday, my husband and I of a bunch of roof shingles always love. Update was, Yeah, there we go because our insurance company says we have to replace the roof on our barn. So literally, you know, we have to have roofs and we have to do what the insurance company says.

You're welcome, Brad. You've made your career sort of doing the deals like this, one after another sequentially, and unfortunately time is linear and scarce, and we only live ones. If you could clone yourself and there were one hundred, Brad Jacob, are there a lot more deals like this sitting out there that the only reason you're not doing them is because unfortunately we only have so much time. And the reason I partly ask this is because there are a lot of people in recent years x MBA's people who have told this story that there's tons of businesses out there that aren't being run at their maximal operational performance, some of the very small level.

You're welcome, Brad. You've made your career sort of doing the deals like this, one after another sequentially, and unfortunately time is linear and scarce, and we only live ones. If you could clone yourself and there were one hundred, Brad Jacob, are there a lot more deals like this sitting out there that the only reason you're not doing them is because unfortunately we only have so much time. And the reason I partly ask this is because there are a lot of people in recent years x MBA's people who have told this story that there's tons of businesses out there that aren't being run at their maximal operational performance, some of the very small level.

Go buy a pool.

Go buy a pool.

Cleaning company and then roll it up into ten and then you can make it better and make a bunch of money or an HVAC company, whatever. How much opportunity is there if time for you weren't a scarce asset.

Cleaning company and then roll it up into ten and then you can make it better and make a bunch of money or an HVAC company, whatever. How much opportunity is there if time for you weren't a scarce asset.

So, first of all, that's a scary thought one hundred brad Jacks. But the answer your question is yes, and note yes, there's tons of opportunities of going into companies and significantly improving the profitability of them. But no, in the sense that there's not a lot of people can do that. I'm not the only guy. I can do that. Ed Breeden can do this, Larry Kolp can do this, Dave Cody can do this. There's a bunch of executives who've come out of academy trained organizations.

So, first of all, that's a scary thought one hundred brad Jacks. But the answer your question is yes, and note yes, there's tons of opportunities of going into companies and significantly improving the profitability of them. But no, in the sense that there's not a lot of people can do that. I'm not the only guy. I can do that. Ed Breeden can do this, Larry Kolp can do this, Dave Cody can do this. There's a bunch of executives who've come out of academy trained organizations.

Like like for guess if there are one hundred Bridge Inos, they don't be competing and each other and that would drive up the price of Beacon roofing even further.

Like like for guess if there are one hundred Bridge Inos, they don't be competing and each other and that would drive up the price of Beacon roofing even further.

Anyway, we'll stick with one.

Anyway, we'll stick with one.

Okay, yeah, Well, are you done on the deal making front or is this going to be busy for a while?

Okay, yeah, Well, are you done on the deal making front or is this going to be busy for a while?

Traces is the first one. Yeah, we're going to build a fifty billion dollar company over the next five or six years.

Traces is the first one. Yeah, we're going to build a fifty billion dollar company over the next five or six years.

Well, this is how quickly though?

Well, this is how quickly though?

Like this?

Like this?

Are you looking already.

Are you looking already.

Absolutely I have a deal team we're looking at and we're talking and we haven't even acquired yet. But even as we're about to acquire Beacon and we're focusing on the integration and optimization, we're still looking at other deals. We have tons of capacity to do that. I don't like to do like five deals at a time, five big deals, but I actually like doing a couple deals at a time because then you do one reorganization and then you pause for a year year and a half while you're integrating and optimizing. You don't have to like start and stop. So I kind of like doing that. But when you look at M and A, M and A is gonna be a big driver for our growth here. That's in our DNA. So ten billion with Beacon gets us one fifth of where we're going to be. So it's a good start, but it's really just to start. The acquisitions that Beacon have been doing are these relatively smaller ones, and you know they do like a dozen fifteen a year. And I met with the head of the M and A, the nice guy, and I asked him my challenge him. I said, what's holding you back from doing two or three times that? He said, really nothing just hasn't been our goal. You just need a couple more people, and you know we can get going. We have the backlog, we have the relationships, we have the network. We have to know how. So I said, okay, well, I think we're going to do that, and we need to get more input and get more feedback where we just impulsively say, you know, triple amount of acquisitions you're doing. But I think that's pretty likely we're going to come out saying let's do more. Let's increase the pace of these small tucking acquisitions because the multiples are very reasonable in those small ones and the synergies are really great. Then you have not a lot, you got a couple of handfuls of medium sized ones, ones that are like fifty million of ebit DAH or two hundred and fifty million EBITDA or something in between. I want to take a real hard look at those. If we can go get those at reasonable prices, then they absolutely belong as part of us. We want to do that. But then we'll look at M and A and other verticals that are for the most part related but not roofing, but something that's in the same part of the cycle. Of the of the building cycle, and we'll do acquisitions there. So we're going to do a lot of M and A. We're also going to do green fields. So when you google me, if you come across a lot of stuff about the M and A, like all these stories about only five hundred deals in this deal and that deal, and this is eleven billion and seven billion and three billion. But we really made the money on the green fields. Wed we made the money on two things. We made the money on improving the profits of the companies we bought by sticking to the playbook and doing green fields. Green fields by that I mean cold starts just instead of buying someone, just renting or buying some leasing or buying some space and a building and hiring some people.

Absolutely I have a deal team we're looking at and we're talking and we haven't even acquired yet. But even as we're about to acquire Beacon and we're focusing on the integration and optimization, we're still looking at other deals. We have tons of capacity to do that. I don't like to do like five deals at a time, five big deals, but I actually like doing a couple deals at a time because then you do one reorganization and then you pause for a year year and a half while you're integrating and optimizing. You don't have to like start and stop. So I kind of like doing that. But when you look at M and A, M and A is gonna be a big driver for our growth here. That's in our DNA. So ten billion with Beacon gets us one fifth of where we're going to be. So it's a good start, but it's really just to start. The acquisitions that Beacon have been doing are these relatively smaller ones, and you know they do like a dozen fifteen a year. And I met with the head of the M and A, the nice guy, and I asked him my challenge him. I said, what's holding you back from doing two or three times that? He said, really nothing just hasn't been our goal. You just need a couple more people, and you know we can get going. We have the backlog, we have the relationships, we have the network. We have to know how. So I said, okay, well, I think we're going to do that, and we need to get more input and get more feedback where we just impulsively say, you know, triple amount of acquisitions you're doing. But I think that's pretty likely we're going to come out saying let's do more. Let's increase the pace of these small tucking acquisitions because the multiples are very reasonable in those small ones and the synergies are really great. Then you have not a lot, you got a couple of handfuls of medium sized ones, ones that are like fifty million of ebit DAH or two hundred and fifty million EBITDA or something in between. I want to take a real hard look at those. If we can go get those at reasonable prices, then they absolutely belong as part of us. We want to do that. But then we'll look at M and A and other verticals that are for the most part related but not roofing, but something that's in the same part of the cycle. Of the of the building cycle, and we'll do acquisitions there. So we're going to do a lot of M and A. We're also going to do green fields. So when you google me, if you come across a lot of stuff about the M and A, like all these stories about only five hundred deals in this deal and that deal, and this is eleven billion and seven billion and three billion. But we really made the money on the green fields. Wed we made the money on two things. We made the money on improving the profits of the companies we bought by sticking to the playbook and doing green fields. Green fields by that I mean cold starts just instead of buying someone, just renting or buying some leasing or buying some space and a building and hiring some people.

And it's yours from day one.

And it's yours from day one.

It's yours from day one, and you don't have it, So go back to the ROI C. Joe. The IC is a lot lower. The investor capital in a startup is much much lower than paying ten times even DOT to buy somebody. So we're gonna we're gonna do those two. So we will have M and A in our in our game plan, but we're also gonna have these green fields, and you look at you're not rentals, for example, you're not in rentals. We did two hundred some odd acquisitions. We did two hundred some odd green fields. I got a ton of press for the M and A. I don't think I got one article about the green fields.

It's yours from day one, and you don't have it, So go back to the ROI C. Joe. The IC is a lot lower. The investor capital in a startup is much much lower than paying ten times even DOT to buy somebody. So we're gonna we're gonna do those two. So we will have M and A in our in our game plan, but we're also gonna have these green fields, and you look at you're not rentals, for example, you're not in rentals. We did two hundred some odd acquisitions. We did two hundred some odd green fields. I got a ton of press for the M and A. I don't think I got one article about the green fields.

And we made a lot more money on the green fields.

And we made a lot more money on the green fields.

Can you give us, whether we're talking about deals, a little lay of the land about market share? How big is the space and how much market share does Beacon have and how fragmented is it and so forth.

Can you give us, whether we're talking about deals, a little lay of the land about market share? How big is the space and how much market share does Beacon have and how fragmented is it and so forth.

It depends how you categoryze, how you count it, but generally speaking, somewhere between fifteen and seventy five billion dollars. So it's not huge. It's not like a five hundred billion dollar TAM or trillion dollar TAM. But it's not insignificant either.

It depends how you categoryze, how you count it, but generally speaking, somewhere between fifteen and seventy five billion dollars. So it's not huge. It's not like a five hundred billion dollar TAM or trillion dollar TAM. But it's not insignificant either.

Revenue.

Revenue.

That's revenue, yes, and then you have Beacon has ten billion of that, so somewhere is between you know, fifteen twenty percent in that kind of range. There's two other actually very good companies, this one called ABC, which is run by this was the chaired by this amazing woman called Diane Hendrix. W Right had the pleasure of meet brief at least proably doesn't remember me at an event in Pond Beach that Byer Trot was having a couple of years ago. And this is this is a woman who's built up an amazing company. When you go to the trade shows, and I'm going a few the trade shows. They got the hottest booth, a lot of activity, there's a lot of energy there and very dynamic. It's very self confidence, got it. It looks like a really good company from the outside. And then there's another company that a very iconic entrepreneur similar to me in a lot of different ways, called Dan Tinker built up. It's called SRS. And they got backing from Leonard Green and from Berkshire Partners, and they built up a real nice company. They sold it for fifteen twenty billion dollars to Home Depot, So that's part of Home Depot. But that was also a spectacular story, I mean a real American success story where they had twenty percent organic revenue growth between ten and twenty twenty three. I've studied a lot of industries. I've been in a lot of industries. I've not seen a lot of industries where a company can have twenty percent organic revenue growth that is very impressive between price volume and green fields, not through acquisitions, organically organic revenue growth very very impressive, which is why I got this great multiple when he sold it to Home.

That's revenue, yes, and then you have Beacon has ten billion of that, so somewhere is between you know, fifteen twenty percent in that kind of range. There's two other actually very good companies, this one called ABC, which is run by this was the chaired by this amazing woman called Diane Hendrix. W Right had the pleasure of meet brief at least proably doesn't remember me at an event in Pond Beach that Byer Trot was having a couple of years ago. And this is this is a woman who's built up an amazing company. When you go to the trade shows, and I'm going a few the trade shows. They got the hottest booth, a lot of activity, there's a lot of energy there and very dynamic. It's very self confidence, got it. It looks like a really good company from the outside. And then there's another company that a very iconic entrepreneur similar to me in a lot of different ways, called Dan Tinker built up. It's called SRS. And they got backing from Leonard Green and from Berkshire Partners, and they built up a real nice company. They sold it for fifteen twenty billion dollars to Home Depot, So that's part of Home Depot. But that was also a spectacular story, I mean a real American success story where they had twenty percent organic revenue growth between ten and twenty twenty three. I've studied a lot of industries. I've been in a lot of industries. I've not seen a lot of industries where a company can have twenty percent organic revenue growth that is very impressive between price volume and green fields, not through acquisitions, organically organic revenue growth very very impressive, which is why I got this great multiple when he sold it to Home.

Depot, soa is amazing.

Depot, soa is amazing.

Those two companies and Beacon together have more than half of half of the industry. But then there's these other companies, these independence and these smaller companies that are smaller but are really strong, feisty companies.

Those two companies and Beacon together have more than half of half of the industry. But then there's these other companies, these independence and these smaller companies that are smaller but are really strong, feisty companies.

So people have to have roofs over their heads. As we discussed, it's not a discretionary item for most people. But at the same time, I imagine if the economy slows down, if interest rates are high, then maybe construction starts to slow and you see fewer sales of roofing, shingles or whatever. Give us your general read on economic activity right now? What are you seeing from your perspective, as you know, chairman and CEO of QXO, your first acquisition, but also taking into account all of your other many many logistics businesses.

So people have to have roofs over their heads. As we discussed, it's not a discretionary item for most people. But at the same time, I imagine if the economy slows down, if interest rates are high, then maybe construction starts to slow and you see fewer sales of roofing, shingles or whatever. Give us your general read on economic activity right now? What are you seeing from your perspective, as you know, chairman and CEO of QXO, your first acquisition, but also taking into account all of your other many many logistics businesses.

The two partially questioner. The first part is what happens to the distribution of roofing supplies and waterproofing supplies too, because that's part of the very fast growing part of this business intercession or and economics slow down. For eighty percent of what Beacon does, you're still going to it's nondiscretionary. If you have a leaky roof, you want to fix it. Whether the economy is good or bad, that's not the point. As you got rain coming down into your living room, you have buckets that are getting it. You're going to change your roof, you just are. But twenty percent of the business is with new construction, and it is discretionary something it's not just regular maintenance and there that would be affected by an economic slowdown. But the vast majority of the roofing business is non discretionary. It's it's much less sensitive to the economic cycles than other businesses I've been in. Now to the twenty percent that's more directly affected by the economy, I don't know. We're in a situation in the economy right now where I can't point to any other history where this has happened before. So I don't have a good muscle memory to say this is what's happened in the last five times we were in this situation, and therefore that's likely what happened here. We've never had the type of economic policy and the trade policy that we've got going on right now. So we're on new territory and I think it's evolving, the policy and it's changing, and then you have reactions from from the counterparty from the other countries. So I don't know how it's gonna play out. I don't know how. I don't know anyone knows how it's going to play on. That's what's very interesting about It's very fun times to be living in right now.

The two partially questioner. The first part is what happens to the distribution of roofing supplies and waterproofing supplies too, because that's part of the very fast growing part of this business intercession or and economics slow down. For eighty percent of what Beacon does, you're still going to it's nondiscretionary. If you have a leaky roof, you want to fix it. Whether the economy is good or bad, that's not the point. As you got rain coming down into your living room, you have buckets that are getting it. You're going to change your roof, you just are. But twenty percent of the business is with new construction, and it is discretionary something it's not just regular maintenance and there that would be affected by an economic slowdown. But the vast majority of the roofing business is non discretionary. It's it's much less sensitive to the economic cycles than other businesses I've been in. Now to the twenty percent that's more directly affected by the economy, I don't know. We're in a situation in the economy right now where I can't point to any other history where this has happened before. So I don't have a good muscle memory to say this is what's happened in the last five times we were in this situation, and therefore that's likely what happened here. We've never had the type of economic policy and the trade policy that we've got going on right now. So we're on new territory and I think it's evolving, the policy and it's changing, and then you have reactions from from the counterparty from the other countries. So I don't know how it's gonna play out. I don't know how. I don't know anyone knows how it's going to play on. That's what's very interesting about It's very fun times to be living in right now.

Okay, this is a question we like to ask people who are actually doing stuff, so deal makers and people like that. But what was the hardest part of this acquisition? So I know it's still early days, but just in terms of the process so far, what did you find most challenging.

Okay, this is a question we like to ask people who are actually doing stuff, so deal makers and people like that. But what was the hardest part of this acquisition? So I know it's still early days, but just in terms of the process so far, what did you find most challenging.

So up until now, we don't close the deal till the end of April. Up until now, when we've been negotiating to do the deals, they didn't want to sell. I mean, it was just we just got the hand. We just couldn't get a conversation, couldn't get a meeting. I never met the CEO until last week. We just couldn't get a meeting, and they were reluctant to sell. So that was kind of tough to buy a company when you don't have someone on the other side who wants to meet and they want to sell. They were proud of their company, They had a high value expectation, and they wanted to continue executing on their planet. They had confidence in so that was tough. It was tough to overcome that, I felt. I felt that the right thing to do was to make them an offer and just stick to that price no matter what happened. Now, as it turned out, Tracy, between when we made them the offer, which I think was November, and as the months progressed. During the offering process, the market got worse, the economy got worse, the building products got worse, the stocks got worse, and we had people advising us saying, you know, Yota, just withdraw your offer, let their stock go down twenty to thirty bucks or whatever would have gone down and come back with a much lower price. And I really struggle with that. That's just not how we roll. And yes, we would have saved some money, but it would have been I don't know, we had ethical challenges with that. It's just not it would have hurt our reputation, and we didn't do it. We liked the price of one hundred and twenty four and thirty five cents. On hundred twenty four dollars and thirty four cents thirty five cents, it makes sense we're going to be able to double the profits over time. So it worked. We're buying it at a reasonable price. But it was it was a challenge to figure out do we play tough guy like a private equity guy would have done and retrade the price, or do we just do the right thing and stick to the price. So we stuck to the price.

So up until now, we don't close the deal till the end of April. Up until now, when we've been negotiating to do the deals, they didn't want to sell. I mean, it was just we just got the hand. We just couldn't get a conversation, couldn't get a meeting. I never met the CEO until last week. We just couldn't get a meeting, and they were reluctant to sell. So that was kind of tough to buy a company when you don't have someone on the other side who wants to meet and they want to sell. They were proud of their company, They had a high value expectation, and they wanted to continue executing on their planet. They had confidence in so that was tough. It was tough to overcome that, I felt. I felt that the right thing to do was to make them an offer and just stick to that price no matter what happened. Now, as it turned out, Tracy, between when we made them the offer, which I think was November, and as the months progressed. During the offering process, the market got worse, the economy got worse, the building products got worse, the stocks got worse, and we had people advising us saying, you know, Yota, just withdraw your offer, let their stock go down twenty to thirty bucks or whatever would have gone down and come back with a much lower price. And I really struggle with that. That's just not how we roll. And yes, we would have saved some money, but it would have been I don't know, we had ethical challenges with that. It's just not it would have hurt our reputation, and we didn't do it. We liked the price of one hundred and twenty four and thirty five cents. On hundred twenty four dollars and thirty four cents thirty five cents, it makes sense we're going to be able to double the profits over time. So it worked. We're buying it at a reasonable price. But it was it was a challenge to figure out do we play tough guy like a private equity guy would have done and retrade the price, or do we just do the right thing and stick to the price. So we stuck to the price.

In your life experience, does everyone have a price?

In your life experience, does everyone have a price?

Well, what do you mean by that?

Well, what do you mean by that?

You know, people are like, oh, I love this is my family, but I would never sell it, or I would never leave this job, I would never leave Bloomberg, I would never whatever. Does everyone have a price?

You know, people are like, oh, I love this is my family, but I would never sell it, or I would never leave this job, I would never leave Bloomberg, I would never whatever. Does everyone have a price?

No, some people are just so people. Principle, Well, it's not just principle. Some people are in love with what they're doing in life, whether it's in the arts, or whether it's in academia, or whether it's in business, and they just really love what they're doing. It's not a question of money. I mean, the people I know in life who are non money. People who are just not into money. They're the people I respect the most. Actually, I mean, this weekend, I sponsored the Black Music Symposium at Bennington College, where I went to school fifty years ago, and it was really exciting, and one of the musicians, are a really good musician, called me on. I said, look, I think I'm still a musician even though I'm not doing music. I'm doing business because I'm I'm still improvising. I'm still putting teams together, and I've got harmony going on, and I've got a beginning in the middle and an end, but not much in between those things. And it just comes to that, said, let's punch of crap. You know, you're not a musician, You're you're not an exist.

No, some people are just so people. Principle, Well, it's not just principle. Some people are in love with what they're doing in life, whether it's in the arts, or whether it's in academia, or whether it's in business, and they just really love what they're doing. It's not a question of money. I mean, the people I know in life who are non money. People who are just not into money. They're the people I respect the most. Actually, I mean, this weekend, I sponsored the Black Music Symposium at Bennington College, where I went to school fifty years ago, and it was really exciting, and one of the musicians, are a really good musician, called me on. I said, look, I think I'm still a musician even though I'm not doing music. I'm doing business because I'm I'm still improvising. I'm still putting teams together, and I've got harmony going on, and I've got a beginning in the middle and an end, but not much in between those things. And it just comes to that, said, let's punch of crap. You know, you're not a musician, You're you're not an exist.

I know, all right, Brad Jacobs, thank you so much for coming back on odd Lots and walking us through the latest deal. Congratulations, really pleasure.

I know, all right, Brad Jacobs, thank you so much for coming back on odd Lots and walking us through the latest deal. Congratulations, really pleasure.

You know this is the only podcast I'm doing.

You know this is the only podcast I'm doing.

Thank you. We're cutting this clip. We're cutting this clip and running that.

Thank you. We're cutting this clip. We're cutting this clip and running that.

Thank you so much, Brad. Thank you, Joe.

Thank you so much, Brad. Thank you, Joe.

That was a really interesting conversation. We don't normally do episodes about specific transactions, but I think this one was interesting, not just from a macro perspective, but just out of the broader m and a environment, as we've been discussing, kind of lackluster recently. So it was good to talk about a big deal that has actually happened.

That was a really interesting conversation. We don't normally do episodes about specific transactions, but I think this one was interesting, not just from a macro perspective, but just out of the broader m and a environment, as we've been discussing, kind of lackluster recently. So it was good to talk about a big deal that has actually happened.

You know what was interesting You asked Brad about the state of the economy, and it was sort of cagey about it. Then in his next question he talked about the environment from November to now. He's like, oh, the economy slowed. So he gave a little hint there that he there's I mean, look, the market has sload, for sure, but a little hint about the state of the environment maybe in that answer. But I really like talking to Brad. It is fun, you know, it's interesting. Here's something really confusing. You know that phrase deals are my art form. Other people paint beautiful.

You know what was interesting You asked Brad about the state of the economy, and it was sort of cagey about it. Then in his next question he talked about the environment from November to now. He's like, oh, the economy slowed. So he gave a little hint there that he there's I mean, look, the market has sload, for sure, but a little hint about the state of the environment maybe in that answer. But I really like talking to Brad. It is fun, you know, it's interesting. Here's something really confusing. You know that phrase deals are my art form. Other people paint beautiful.

No.

No.

No, I do not know that phrase. No, but it's something people actually say.

No, I do not know that phrase. No, but it's something people actually say.

No.

No.

So like, there's this quote deals from my art form. Other people paint beautifully on canvas or write wonderful poetry. I like making deals, preferably big deals. That's how I get my kicks. I always thought it was a Trump quote, but then I searched it and appurely, and Koch said it, and now I'm really confused. Anyway, I don't I don't know. It's a great phrase. But you know, hearing Brad talk about the end, it's like, I'm still a musician, and it's like, nor your art form is deals. It sounds like he really likes like.

So like, there's this quote deals from my art form. Other people paint beautifully on canvas or write wonderful poetry. I like making deals, preferably big deals. That's how I get my kicks. I always thought it was a Trump quote, but then I searched it and appurely, and Koch said it, and now I'm really confused. Anyway, I don't I don't know. It's a great phrase. But you know, hearing Brad talk about the end, it's like, I'm still a musician, and it's like, nor your art form is deals. It sounds like he really likes like.

Doing you like steelmaking for sure. The other thing I was thinking, you know, we were talking about price and that forty percent premium that they're paying for Beacon, and I had that, you know, that scene from Succession in my mind.

Doing you like steelmaking for sure. The other thing I was thinking, you know, we were talking about price and that forty percent premium that they're paying for Beacon, and I had that, you know, that scene from Succession in my mind.

Because I haven't seen Succession. I know, let's not talk about this.

Because I haven't seen Succession. I know, let's not talk about this.

Go on.

Go on.

Wait, wait, okay. So there's a scene where you know, they're making a bid for another company and they just throw out this insane number and the head of the media empire at that time, the sort of patriarch of the family, says congratulations on saying the bigger number. And so I always think about that when it comes down to pricing for M and A. You have to watch Succession. I can't.

Wait, wait, okay. So there's a scene where you know, they're making a bid for another company and they just throw out this insane number and the head of the media empire at that time, the sort of patriarch of the family, says congratulations on saying the bigger number. And so I always think about that when it comes down to pricing for M and A. You have to watch Succession. I can't.

Oh no, no, that's not my thing. I did really like it. You know, it's interesting.

Oh no, no, that's not my thing. I did really like it. You know, it's interesting.

Wait wait, not media plus business.