Summary

In this conversation, Jon Stoddard interviews Thomas Le Maguer, co-founder and CEO of Republics, discussing his journey in entrepreneurship, the vision behind Republics, and the strategies for growth through acquisitions. Thomas shares insights on mentorship, particularly the influence of Dan Pena, and the importance of understanding seller motivations. He elaborates on building a strong team, creating an acquisition engine, and the balance between debt and equity financing. The discussion also touches on the significance of recurring revenue and the challenges of leadership in a growing company.

Takeaways

The vision for Republics is to create a growth platform for small businesses.
Acquisitions are a key strategy for rapid growth.
Mentorship plays a crucial role in entrepreneurial success.
Creative financing can enable acquisitions without upfront cash.
Understanding seller motivations is essential in M&A.
Building a strong team is vital for managing growth.
An acquisition engine can streamline deal flow.
Debt financing can be preferable to equity in certain situations.
Recurring revenue models enhance business stability and valuation.
Effective leadership requires a balance of kindness and decisiveness.

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Transcript:

Jon Stoddard (00:00.14)
Welcome to the top &A entrepreneurs. Today my guest is Thomas Lee Magier. He's the co-founder and CEO of Republics, sharply dressed guy, definitely overdressed than I usually am, but welcome to the show. to be here, John. Thanks for having me. So let's go a little bit back. You and I started talking a year ago. We were talking about reggae because you're probably raising money for your company. You recall that conversation?

I do recall that, yes. Yeah. So I wasn't doing, I was in it, but I'm not doing it anymore because we focused on OTC companies. Anyway, you also know a guy that I known for a couple of years is Trevor Turnbull. He owned a agency called LinkedIn Deletes Agency, which acquired

irrational acquired LinkedIn deletes and then evolved into Republics. Correct. And you've made about 10 acquisitions since then, which are Arcane, Media Mechanics, Tag, Source Strike, Noodle Wave, Bantio.io, and Pedestal. Pretty amazing. Which means you're doing almost 38 million in revenue and 10 million in EBITDA. Correct.

On a pro forma trailing 12 month basis. Nice. Very nice. So let's talk about how this all started. Now, how did you get, where did the inspiration to go? I'm just going to do this company. And then you know what? We can grow faster. We just acquire. How did that start? man. So I started with you, rational marketing. We're growing 50 to a hundred percent a year organically and

The vision has always been to build the number one growth platform in the world that can connect a small business owner to the perfect combination of marketing services delivered automatically with accountability. So easy, predictable, organic growth for business owners. That's been the vision. And my partner and I, Nico Elegier, he's my co-founder, we're like, you know what? Like, how can we grow faster? There's no way that we're achieving our dream.

Jon Stoddard (02:20.622)
of being this number one platform, number one and number two, having enough customers to have critical mass within the SMB space, because there's 400 million small businesses worldwide. Plenty of room, plenty of space. Plenty of room, plenty of room, right? And so we said, you know what, let's go ahead and acquire all the big wealth that was done in the past has been done through, a lot of it's been done through acquisition.

So I started digging more into that and then met my mentor, Dan, who became a chairman. Penya. Dan Penya. Okay, we know him. He's the all caps guy. All caps, all the way. Yeah. And salty talk too. Yes, there's that as well. And that's where I always like distinguish things, you know, what is the message and what is the messenger?

And I've been very blessed to be able to separate the two, because the man speaks the truth. And I didn't always want to hear it. Most of the time, I don't want to hear it actually. he's taught me a lot. I'm very, very grateful. there is a lot. I have to stop you and ask you about this, because there's a lot of courses out there, from Carl Allen to Roland Fraser, Dan Pena.

a number of them, what does Dan teach different than these guys? Why did he resonate with you versus all these other guys? Well, I know Roland Frazier because of his connection to digital marketing, but I didn't know that he was teaching acquisitions. I haven't learned about these other folks either. frankly, as soon as I... Okay, so let me backtrack in terms of like...

my philosophy in terms of learning. So I'm a concert pianist. I also became a gold level ballroom dancer while I was a kid. Then I got a black belt in martial arts. Then I learned all of these things and how to master them at a young age. Cause like my parents trained me that way. And I was like, well, what was the difference? How did they train me? Number one, always get

Jon Stoddard (04:47.202)
the best coach, how do you determine the best coach? Look at the results. Based on that, it's not because you have results that you know how to teach. So then it's also the transference of that knowledge and then habit, right? So I learned that from my past. And so every single time I wanted to take the next step in terms of my evolution, I always looked at who's done it, who's done it with repeated success, because that equals a process or a methodology. And I know that that's the foundation of success.

And then what I need to bring to the table is work ethic and habit, right? And so I said, if there's a person who has the system and it seemed that that was the case and I was right in seeing that, then I'm very much one to say, I will follow blindly. Cause I understand that to achieve something that I've never achieved before, I got to do something that I've never done. So.

It's kind of a weird blind faith kind of a thing. Right. So I embarked on that 2019. I became one of his, fastest, deals, from start to finish. think mean, mean taking his training to first acquisition. Correct. Yeah. Okay. Like a board dream team, all these things, accountants, lawyers, professionals, everything done and then deal closed. And that deal was Trevor. Right.

And so that's how it comes full circle. But that's how I got connected with Dan. That's how I judged his merit. And again, I just looked at the message. And I was like, there's truth here. Let me take a leap of faith. So what is that message? mean, I haven't taken Dan Penyes, but I've taken a number of other courses like Carl Allen, Jeremy Harbor. just bought his book. And then I went through Roland's that you're unaware of.

What is this message that, and I'll tell you this, there's another guy, Jason Paul Rogers, who's killing it down in Florida. He's a Dan Penya student. So the premise behind it, and this is just my interpretation of it, is that generational wealth is built through a series of transactions. One. Two, it's not hard. So it's an easy process. What's hard,

Jon Stoddard (07:11.337)
is the emotional aspect of it and the fact that we're hardwired to be weak or to succumb or wanting to be liked. And that's kind of like a premise of like more the emotional and the personal aspect. So if I really look at what his methodology is, it's really around how to be a high performance individual and how super wealthy successful people think.

And it's just so different than conventional wisdom. So that's another aspect. And saying that the next one is if you follow this system, it will work for you too. Because here's an 80 IQ guy who did it. Here's 180 IQ guy who did it. Here's somebody who like literally had Down syndrome, did it. Tens of millions.

And so you see case after case after case after case, and you're like, well, huh, dang, if that person can do this, I can too, right? So it's very methodology driven. And I really appreciated that. there's a, so core premise is you can do it, become a high performance person, but it's not for everybody.

And the sooner you can come to that determination, the better that your high performance or not. The other one is this angle of the psyche and the psychology of being a high performer and beating out all the bad habits we have in us that prevent us from achieving super success. And then executing along this methodology that how he endearingly calls us his meatheads, how any meathead could go ahead and do this if they were to just follow the system.

And that if you aren't getting success, it wasn't the system because the system has proven to work. It's you. So in interesting. Yeah. So interesting when you took this system and reached out to, Trevor Turnbull, LinkedIn to leads. Now, were you offering him creative financing such as like a dealer finance, seller financing or earn out or.

Jon Stoddard (09:37.773)
or were you just offering him money for his operation? How did that conversation go with Trevor? Yeah, no, well, you know, on that one there, I mean, like the deal is, I mean, it's private, but it involved seller financing. It involved delayed consideration, some sort of earn it, and involved a little bit of cash that we found a way to do that creatively. So, because at the end of the day, like,

The thing that I can't share is that I didn't have any.

and he wanted some money and we made it happen. like that's another distinguishing factor with Dan is zero money required. And I'm the proof of that. Cause my first three transactions didn't involve any cash.

And then my next one still cash out of pocket was zero.

and got the bank financing done on a 1.3 million EBITDA company. And then we're on our way. Yeah. So how to start from nothing, saying no excuses, nothing. You can be poor. And he came from a very poor background, just the ghettos, right? And just being like, you can go from nothing to something. Just following the script. What was Trevor looking for? Was he looking to sell?

Jon Stoddard (11:07.595)
Yes. Yeah. The foundation of everything is a motivated seller. Yeah. Was it profitable? A company? Yes. Yeah. We're not a turnaround model. We only buy things that make money. Yeah. Why did he want to sell? I mean, did he said like some kind of life event that are just tired or exhausted? What was it? Well, that one there, I'll just let, let Trevor comment on it. Cause at the end of the day, you know, like I,

I'm free to comment on my life and the things that I've done, but. Yeah, yeah. I was just trying to categorize it and like, what's the motivation? Because people, when they buy businesses, you know, they're trying to uncover what the motivation is and then address that need. I want to get out of the business because of this. Okay. Let me help you solve that problem. Awesome. So then what I can do is take a cross section of the 13 deals I've done in the last two years. And they kind of fall in a few categories.

One of them, they're tired. Just straight up, they're tired. And they wanna just take some chips off the table. That's like category one. Category number two, they have a life event of some sort, either health related or somebody close to them is having an issue or a personal event like a divorce or a relationship issue, something happens to a child. That whole category there creates a motivated seller.

Those are primarily the ones that we work with. Let me take a look at the other ones. Yeah, the other ones now, the ones that we work with is that, because we're not done when we acquire them, we grow them. Yeah, the point is to grow them, you know, as another mentor says, like double EBITDA or take the top to the bottom, whatever that goal looks like. I absolutely, well, in this case, it's like double EBITDA or more.

So from that standpoint, a lot of the founders that sell to us, they stay with us. So from that standpoint, they know they've hit a cap and they want more. And they understand they're at that point of their business. They could be at 10 million in revenue and whatever, 22 million. And if it done, they know they want more. So then they come and join us. We give them some cash. We structure a deal. We roll over some equity so that they can be a part of Republics.

Jon Stoddard (13:31.871)
and own another, own the bigger thing, a smaller piece of the bigger thing. SDP up here, some kind of holding company. Yeah. 100%. And then be able to get another bite at the owl. So is Trevor or your companies that you're acquiring, not just Trevor, are they W, well, that's a United States, are they W2s, are they employees now? It won't, yes. But they still own whatever's rolled over. Like if you only bought 70 % of the company.

That's right, yeah. For example, like, and now like we really aim for 100 % purchase. We found that minority shareholding is just annoying. I was gonna Go ahead and take care of that upfront, you know? All right, man. Thanks for being honest about that. I know it works well in private equity, but you know, but somebody in the smaller to mid market, you know, it's annoying.

Yeah, no, it can be. also, I found that the more we can move the pieces as one, especially from a cash flow standpoint, better. Yeah. Right. And so when you have minority shareholders, it's important to honor them. So then you can, well, you can, if you structure it properly, you know, participate in 100 % of the cash flow, I just didn't know how to do it right.

So, but listen, you live, learn as you move along. And I know a lot of people can do it successfully with, you know, just a slight majority. I just haven't learned how. but yeah, so they, yes, they end up being W2, if not, it's just not compliant, right? Like once we have an, like right now we have 147 full-time equivalents that are working with us.

We're in Canada, US, UK in terms of physical presence. We also have offices in Romania and Panama. So once we start dealing with this type of cross border type dealing, number one, from a tax structure and standpoint, it gets a little bit more complicated, but there's a lot more opportunity from a sales standpoint, that's one. But then from a human capital standpoint,

Jon Stoddard (15:57.453)
it gets way more complicated. And so what we're working now on is unified performance management, unified bonus and compensation structures in the way that aligns proper incentives. And it's just part of the growing pains of what we're going through. Yeah. I had a conversation with my buddy, he a CPA firm and he goes, you know, five years ago.

I get an admin for 30, $35,000. Now it's 50 to $55,000. To get that person and to get those taxes done, I need to charge a lot more to my customers. Anyway, I know that profile. Let me ask you about this part of the question. And we recognize like Roland Fraser who can do deals all the time because he's got these pillars or columns like.

He's got Digital Marker, which is a platform company that if he acquires a company, he can just take top to bottom or double EBITDA. And then he's got all these epic people. They're kind of like bird dogs that they bring deals, siphon up the deal flow up to him. And then operations, he's got Ryan Dice and those guys, he could just go find somebody in. Now, those are the four pillars. And in finding money, investors, not a problem. Where were you at?

with those four columns. You got investors, deal flow, taking the marketing to the next level and then operations. I mean, did you have all those in place when you started? You're just like, my God, now I need those and they're coming in one at a time.

I guess like it really happened from necessity. So I was already CEO but of a smaller company, like a couple million bucks, right? So I had okay operating chops. I had good marketing sales chops, no investors and deal flow is tied to direct marketing.

Jon Stoddard (18:07.987)
indirectly deal sourcing and marketing or tie for me at least. So then that was state zero, state one. And I was always very creative in terms of how to do financing with no money, because I didn't have any money, right? That's just been a part of my life. So then the next step was then creating what we call our acquisition engine.

which is a mix of direct marketing and demand jet. And so I built a pipeline. We had a hundred targets. My team did it. Like we would generate enterprise level sales. Within two weeks, I had 30 some odd calls booked in my calendar of targets. And then out of those, we closed two. And where did you get that deal flow? I LinkedIn delete.

That's place to start, right? Yeah. Well, that one there was, was network. I knew Trevor, we were doing work together previously and I was like, your product line would really nicely match. irrational product line and create an extension. Let's, let's just be better together. That was the conversation there. So there's different types of deals. That one was more of a warm network kind of deal versus arcane was cold outreach, right? Tag was cold outreach. so.

And then, I built this deal engine and it's one of the strongest aspects of my business. Cause when we fire it up, if there's a hundred targets on those hundred targets, I'll get like 40 calls up at those 40 calls. I'll go ahead and close five or six predictably within six months. I'll those businesses. deals were fine from a, from an investor standpoint. Let me ask you about the deal. So where are those deals coming from? Is it just reaching out directly direct mail?

Facebook ad, LinkedIn. Yeah, LinkedIn and then we enrich our data. So we kind of have a LinkedIn email call sequence, but we've never made it to the call. Yeah. It'll just get like LinkedIn email and then calendar slam for two weeks. I do those calls, LOIs within 30 to 40 days and then from there, 60 days to close. Beautiful. Yeah. Yeah.

Jon Stoddard (20:35.071)
So that's the deal side. And then on the capital side, our model is debt driven. So it was all around commercial finance. And so it wasn't until the end of last year really that we raised a small slug of equity. So we really built this off of debt. Okay, so let's go to the debt. Now, how are, a lot of these companies I saw you have are kind of digital marketing, IP software.

Was that off of a cashflow? Yes. Yeah. Okay. Yeah. Cause it debt period when, we're looking at commercial debt, I'd like really good rates is always based on cashflow. So then it was finding the right kind of lenders and there's a process for that. And it took a lot of effort. I got a shit ton of notes. Like I've probably spoken to 250 lenders. Easily one-on-one dragged along. Nothing.

but then you find a few of them that are just like, I like your deal. I'm going to back another one and another one. And then they'll do two, three of them with you per year. Right. So we built up that way initially for the first couple of years until at the end of last year, we, we did a large financing, $70 million. So you raised $70 million with what kind of raise was that reggae or? This is debt. This is. So.

it took out our current debt and just gave us a longer AM. Like in Canada, it's usually five year terms, five year AM, which is hard. The US you get 10 year, you get all this up 20 years, it's crazy down there. it extended our AM, really good interest rate. Recapitalized on how many companies? At that point in time, we...

six plus three, maybe like 10. Three concurrent closes with that recap. And it also gave us a $30 million dry powder acquisition facility, a $5 million revolver and a $5 million capex line that we could go ahead and deploy for technology development. Cause we also have a tech component to our business to be able to properly map and automate.

Jon Stoddard (23:03.051)
the different growth services that we have to better service our customers, right? So all that happened with one provider, which again helps us simplify. That's where again, now we got to just professionalize it and really grow up just from a corporate standpoint, from a team standpoint, and that goes to the final step of operations. I was ill equipped, John.

We're at a stage now of professional managers. So what I've learned there and my board guided me through it, just forcefully and graciously, I'm grateful for it. How would you say you're in that role? mean, you like let somebody else do it. The reason I bring this up is you know who Andrew Wilkins is in, is in Tiny Capital. think he's bought that. Yeah, I've heard of his name.

but I've heard his name and I've heard of Tiny Cap. Yeah, so I haven't interviewed him, but I'd love to. And I saw him on a podcast and he goes, my job is turning into hiring and firing CEOs.

So it's not far off. It's not far off. Because one is getting the most out of your people and helping them jump to a higher standard. But not everyone, everybody wants to do that. One. Two is the team that gets you to point A is not the team that necessarily gets you to point B. I also had to realize that and we had to cycle out management.

You get to learn these things, but the only way you can learn is by doing it. All right, I gotta fire this one. I gotta fire this other person for cause. Okay, now we're litigating. I mean, how else do you learn that? You just can't, right? So from that standpoint, now what my board showed me was saying, listen, you're at 38 million in revenue. Now's the time to go ahead and set the right foundation financially.

Jon Stoddard (25:12.973)
on the financial capital side and on the human capital side of the business, make sure they're both strong with very strong leaders. So then we hired one of the top recruiting firms here in Canada. They were expensive and they saw some top, top, top notch candidates and we interviewed the shit out of them. And so now we're at a point now of bringing these two leaders of the two capital sides of our business.

And we already have somebody very strong at the level of growth in sales. And so we're building out these functions, right? And then once we have those leaders, those leaders hire their respective teams. So then on the finance side, we'll get FPNA function so that we have forward looking capabilities. And then we'll have the controller function. We already have a controller, but an in-house controller function for all the historic capabilities, right? Then we'll have the right pillars to be able to move quick.

Right? So listen, and like, it's a lot of just getting your face kicked in. I've never been this big from a company standpoint. I've never grown this fast. Thomas, I don't know if you know it, it looked in the mirror, but you're a super achiever. You were destined to be in this role. thanks. It comes with the trashing, but it's a good time, I just feel grateful that

I got a super supportive wife. We've been married 16 years now. I've been married for 10. I have five sons with her and they bring just a tremendous amount of joy. There's a lot of darkness in entrepreneurship. There's some really dark places you go and it's sometimes super hard to get out of there. I've been there many times and then I just look at Who do you go to for light? Like what mentors, people?

Do you seek out, necessarily directly, but their material? So I guess not. I, from a material standpoint, mean, I pray and I meditate every day. Yeah. Like Dan Sullivan or Tony Robbins or, know, Hey, I just got a phone call with, you know, Richard Branson. He said, do this, this, and this like, my God, that was so brilliant. Yeah. I guess like I ever since meeting Dan.

Jon Stoddard (27:35.989)
One of the things that I do is that I internalize a mentor and then in some ways become that person and then find a new balance of who I am plus the best traits of what I acquired from them, so to speak, right? Sure, sure. I had a mentor, well, he was my guru and this was maybe 14 years ago and he taught me everything about spirituality and I got initiated in all the different religions and I learned meditation and...

and in all these different things to be able to connect to the source. That was very important for me. That's my spiritual side. And then it swung onto this business side and saying, okay, I'm a spiritual man in a material world. How do I drive that? So frankly, for the last two years, like 90 % of what I listened to is Dan. So his old recordings from the nineties, from now, from him yelling at me, from everything, I just review tapes.

because I remember my mom, she's the one that taught me barn dancing. I hated it, but I became very good at it. And then I realized you will end up loving anything you're good at. I gotta.

question about that because I interviewed 59 now people and the real super achievers like you have told me that I, know, first I didn't do this, but I said, well, where are you getting your answered questions answered now? And I do that lately. And they're all of them are telling me I get, I surround myself with people that are smarter than me. If I'm doing $10 million, I want to hang around people doing 100 million, which is masterminds. And

I'm not in any one of those yet, so I have my sights on it, but that's kind of something I've learned over there. It's true, you are who you hang around with. Yeah. It's a true max, and you are the average of the five people you spend the most time with. So, you know, when I look at my board and the folks that I get to deal with there, like, they're playing at another level, and they're holding me to account. That's the thing, like, as entrepreneurs, how often do we get to be held accountable?

Jon Stoddard (29:48.171)
Right? And like, I felt that wrath, but it either breaks you or it makes you. And so I'm, I'm, I'm feeling that it's making me at this stage, like steel is made by being hammered in the forge. And so I would say that's, that's probably my, my greatest gift is my wife calls it the, the gift of long suffering. Yeah. I got that, you know, which is, which is kind of screwed up, but, but, it is what it is. The other one is like my professionals.

Like BDO does my accounting, PWC does my due diligence and audit, like Galley's my legal counsel, and they're all senior partners. So I speak with them consistently. They're game players, right? They're not fucking around. So these are the folks that I get to interact with on my day-to-day and I work a lot. And the rest of the time I'm with my family. So it's helping me evolve this way while I'm working.

if that makes any sense. Yeah, I like, I'm looking back at your page about your advisors, Daniel Pena, Ron Forbes from Corporate Finance City Group, Bob Coffee, ex vice chairman at KPMG, Jason Swank, Eric Varden, Mike Warren, Andrew Lam. Yeah, that's pretty impressive. Yeah, like because the best lens that I can have, John, to be able to look forward is by having people that

have been there and that can be my eyes because where I am today, I don't know. I need them to know so that I can ask them. Yeah. What the fuck do I do now? They guide me, right? Yeah. So so it's it's yeah. What's so what are you going to go? I mean, 50, 100 million and then sell or keep or what? The markets are pretty intense right

So we're focused right now on just like squeezing everything out of our organization. I mean, we're already profitable, but it comes down to, well, we might as well be the best that we can be. Let's be in rarefied air. Because if we're looking at private equity, public markets, strategic buyers, whoever they are, now it's a flight to quality. Private equity and strategic are sitting on records amount of cash.

Jon Stoddard (32:15.661)
but they're only gonna deploy it on the best. So we wanna have the highest margins, we wanna have the highest recurring revenue, we wanna be growing organically at a solid double digit clip. These things matter, have a very professional team that can handle the acquisitions that I would be looking to do wanna go for. But I mean, like we're sitting on $30 million worth of dry powder. Like I can- No, is that dry powder or is that-

I want to go back to that capital. that debt or is that equity? And aside from you owning 100 % of the company doing that debt, I mean, I'm looking at the numbers, 38 million top line, 10 million EBITDA, 26%, that's just software companies. Are any of these companies kind of like recurring revenue, SaaS stuff where you get the higher multiples? Yeah. So I mean, it's...

We've got 60 % monthly recurring and that was at December 31st. So we're probably at like 63, maybe 64 % MRR or ARR. Then we've got a total of 81 to 83%. Again, it must have grown since then we haven't run that analysis because we haven't gone to market, but that would be recurring, which is MRR, ARR and reoccurring revenue, which would then be contractual.

but it's not as even, but you know how much you're gonna get that year, but it might be 50K one month, 10K another, nothing another one, 60K another month, but you know you're gonna get 300 grand on the year, right? That's reoccurring. that historically we know we have that customer for the last five years, six years, you know it's coming, right? And then the rest is project-based. So because of that revenue profile, we can do some pretty good damage.

so there's that, but with the 30 million in dry powder, could probably do another 13, 12 to 13 million more in the end. Yeah. Sorry. go ahead. Go ahead. ahead. Your numbers are incredible, especially with the reoccurring revenue that somebody's going to say, Hey man, please take our money equity. Please take it. and you.

Jon Stoddard (34:38.113)
Don't want it? Are you okay with debt or? I love debt. You love love debt. Okay. That being said, when we have our strong foundation laid, like a really just, and I feel that that's gonna be here in the coming 90 days. We just gotta make sure our team is very strong, our accountability and processes are very strong. And otherwise, then I think we'll be in a good position.

to have conversations at the level of a partner of some sort when it comes to equity. We just wanted to push off that equity conversation, a meaningful equity conversation down the line after we built a good amount of enterprise value, right? Because then it's what's best for all the shareholders. So that's- Yeah, guess are you 10 million? Are you probably in the multiples like a teens now, 10?

to 15, I would say. Yeah, that's correct. That's correct. And so yeah, I mean, we're making some progress, but it still comes back to the fundamentals, John, like is your business any good? Yeah, customers need you. Do they get transformational changes out of your service or product? 100%. It's the foundation. Like is the customer winning?

Are we providing value to the market? Are we working as a strong team to deliver value for each other and for the market? Right? And so it's the combination of all those things. Like, I remember one of my advisors, he said, and he took his company public, was 400 million, whatever it was, like Thomas, just focus on building a great business. If you focus on building a great business, everything is going to fall into place. Just build a great business.

It's so simple, but simple is fucking hard, It just is. It's business 101. That's what they told me at my board meeting today. They're like, well, it's not that easy. I'm working long hours. I'm It's three steps, That's all it is. steps. my God. You your four pillars. You get the investors, you get yourself the operations. You go and you get yourself some deals.

Jon Stoddard (37:04.141)
And now you're making money. Okay, well, let's get into the how now and the pain you go through, but we're having a lot of fun. Yeah. So you got an engine, a nice acquisition engine for your deal flow, especially with Trevor Turnbull and that group. Are you, has your types of deals and your size of your deals changed because of what you're trying to do? I mean, you can't, it wouldn't make sense to go unless it was a tuck in or a roll in.

for a one to $2 million company now is it five to 10? So the question is it depends. So part of our restructure that we did here in Q1 was structuring our companies around customer types. And so we clustered our agencies and technology companies accordingly. So we have B2CE Com mid-market. We've got B2B SaaS.

We've got technology and software development, three clusters. So what that allows us to do is from an integration standpoint, one, cause now we've launched the clusters, we've rationalized those costs, the leaderships are unified, they're working together. It's actually really fucking cool. So what this allows us to do, let's say 90 days. And of course now we have to upgrade our financial systems to be able to consolidate on one financial platform. Cause 10 separate

Quickbook online is it's just help, it's help. Yeah, you can only have one company on the Quickbooks online. I think it's so small. Yeah. No, it's, it's, so we have 10 Quickbooks online. Yeah. Right. And so consolidation there is a real mess. Anyways, so what this allows us to do is to integrate three companies at once. Cause each cluster has its own leadership and can integrate a company of its type and the

integration is immediately a creative, not just financial, where it's like, okay, like we bought you at four times and we're 13 times, 15 times, whatever it is, right? There's that. But the other one is if we've got like an extra 50 customers that just came in into our business to consumer mid market, and we already have a portfolio there of 300 customers, and you bring a new marketing capability, I mean, the lift.

Jon Stoddard (39:28.845)
All right, let's put you in the customer matrix. Let's see how can we get more share of wallet? How can we better serve those customers? What processes can you benefit from that we've got? Right? So there's that element there from a growth standpoint, which is helpful. Now, back to the targeting question. That means that we can look at companies that would fit each one of those clusters. A tuck-in is very easy.

So it's not even like, that's a 30 day integration. It's like, come in, let's just get her done. Right. And sometimes those are really great because you get them on a cheat. So it's super creative and you're just getting them for their book of clients, maybe a marketing capability and a few key people, right. With a focus on sales and product, right. And the other ones, I think it makes more sense if you're one of the three dock in acquisitions, it has to have a marketing.

or technology capability we're missing. We're looking at 80 % plus MRR, but typically now we're really targeting 100%. We wanna see 35 % plus margins. We wanna see year over year growth. We wanna see a strong leadership that's gonna stay with us and is inspired to go ahead and be even more focused within our group. Typically we wanna see about a million in earnings, right? At a minimum, it's nice, because then there's a stability there.

And typically that would happen after they've cracked sales and some degree of marketing. I'm kind of the profile and then yeah, mostly us now. We really like the US market. I love the US market. Favorite. When you started acquiring companies, were you kind of just going for targets? I know that Trevor Turnbull, LinkedIn, Deletes was

an opportunity that came to you through a warm network. But then you started acquiring companies. Did you have a plan for a spoken hub type deal or it was just target of opportunities? Yeah. No, it was hub and spoke. So again, Dan taught me that as a hub and spoke within three hour drive wherever you're at and thank God, because when we acquired our cane, there were two hour drive away and it was the day that our government

Jon Stoddard (41:53.709)
mandated the state of emergency for COVID. So then suddenly, like we had a hub of like two and a half, three million worth of EBITDA within a driving distance. So that, that served me super, super well. And so now we've got a hub in London. We've got a hub around the Toronto area, which is where I'm at. We have a West Coast hub in Canada, which is Vancouver. We got one in LA.

so now it's more, okay, let's expand some of these areas, with the next batch of acquisitions. but, but yeah, hub and spoke. It's a, it's a pro tried and tested methodology. Another Dan Pena. Yeah. Yeah. Well, I got to kind of getting close to the end, but, how did it turn out for Trevor since the acquisition? I, I'm not going to ask him a, Hey,

How's it working for Thomas? How's it going for you financially? I'm not gonna do that. I'm not gonna jump into that. But I could tell by his message with just an hour ago, he was pleased with what's happening. And he's the way he wrote this that it was a positive note. I mean, Trevor's awesome. I'll just share it in this way.

whatever his deal was on day one, his equity in Republics today is multiples of that. One. Two is he's now focusing in areas of his core genius that are producing value for Republics and for him. And he's been able to focus on the things that he loves most. So that's another thing that's happened out of there. So at the end of the day, like I...

You know, I think it's gone well for Trevor. And at the same time, the only person that can truly say it is him. And it seems that the message he sent you is a good one. But yeah, like that, that's kind of how we try to look at it. I remember in e-rational marketing, we almost went under one year and a whole bunch of people got equity. And I gave them equity because they went without pay for six to eight weeks with no promise of equity. They just worked and they said, we're going to get out of this together.

Jon Stoddard (44:18.239)
Right? So I gave them all equity, 2%, 3%, whatever it was. We just had a shareholder call with them just last week, just be like, hey, how's it going? Here's kind of the update of where we're at. And like their positions are in the hundreds of thousands of dollars. Yeah. Do they get distributions or is it just on exit? Just on exit. don't do dividends. so yeah, like, but that's awesome. Cause

these were employees. So in the same way, when we're looking at Republics, mean, we have an option plan for all of our employees, right? Like that's important, better together, let's go, right? Because wealth is built through equity. Well, I think at least from my limited perspective, but so if we can go ahead and share that with some folks that would never have that opportunity, that's cool.

Right? I think it's kind of cool. And again, I would have never thought of an option plan or anything like that, but Dan's like, hey, the wealth. Why not? And I was like, well, okay, fine. What's, where does that loyalty, obviously you instill confidence and loyalty in your leadership. You're the captain of the boat. Where did that come from in your childhood or culture or mom or dad? What did they instill in you?

Or is it brand new? No, like, well, just deep in me, like when I was 21, my wife was 19 and our first son was on the way. I was still in school and doing those things. Like we're hard up. had no money. We had negative money. And, and just one of the core things is that like, just won't abandon anybody. Just won't. It's like hardwired.

So from that standpoint, it's just like, you just keep on going until you drop dead. That's the end point. So I'm kind of wired that way. I also saw my mom and my dad just being ruthlessly loyal to each other through thick and through thin. And I respect that tremendously, right? So at the end of the day, I think I treat my people right. Like I'm demanding, but I'm fair.

Jon Stoddard (46:43.917)
I try to be decisive, but kind, which is very different. Like, you know, if my board had their way, it'd be like decisive and be an asshole and just drive it. Cause that's what all the tough people do. I'd like to try another way. That's accepted anymore. Yeah. Well, it works. It does work. It works. I see it all the time. I just, it's not aligned with what I want.

And so I really want to try something else. And again, it's integrating what works because there's no doubt it works and I want to be effective. And I think it's possible to be effective and kind. And it's, it's a fine balance. And when I look at my five sons, John, mean, how old are they? What's the range? 15, 13, nine, seven, all boys. Hey, he's almost got a full hockey team there. Yeah. you a hundred percent?

100%. So, I mean, you get what you tolerate. So there's a limit where the child becomes spoiled. It's the same with the team. Like you bend too much without instilling the discipline in the rules, you'll end up with a spoiled child. And that's not good in a high performance team. If you're too hard and you break them and you haven't built the trust because you didn't have their back, you also break them.

So it's a fine balance of, we're pushing the limits here and we can all be more. And then I think it's important also to lead from the front, you know? So that's kind of how I roll with it right now and we'll see how long I last. Yeah, Thomas, you're doing a great job, man. And I really appreciate the time you spent with me. really do. John, I had a good time. was nice catching Le Maguer. Thank you, Maguer, yes.

What does that, it's French means what? It's, so it's a Celtic name. it's Celtic. Yeah. From Brittany in France. And it means the caretaker funny enough, like the nanny. Look at you, the caretaker. I'm the fricking nanny. yeah, that's the root is the caretaker. Yeah. Yeah. Well, good deal. Thanks you so much for the time. I appreciate it.

Jon Stoddard (49:06.21)
John, anything I can do, just let me know. All right, take care. You too, bye.