Josh Giron: Buying a $1.2M Revenue MSP and Nearly Losing His Key Employee

Hey, everybody. Welcome to another episode of Still Searching. Today, we have Josh Giron. He is the owner of Preferred Data Corporation, which is an MSP IT shop out of North Carolina that he acquired about 18 months ago. And so we're going to talk a little bit about his experience identifying and acquiring this business and really focusing on what's life really like after the close and how that's all going. Josh, welcome, man. Welcome, Jed. Pleasure to be here. Love that you have this podcast. Hopefully, my experience and feedback and my story can help other searchers and your community. So looking forward to this. I have no doubt. And everybody doesn't know this, but you and I have known each other for almost 18 months now. Almost two years probably. Exactly. You reached out when you were doing exclusivity on this company and wanted me to take a look at it and see if there are any big red flags. I didn't see any, and I'm glad that you're still in business, so that's good. But let's start from

the beginning. How did you first find out about this whole space of business acquisition and what really made it appealing for you? The real time, the real sequence of events starts when I was in high school. I started my first business in high school, literally as a sophomore. It was an e-commerce business early 2000s. I didn't know what I was doing. Just figured it out and eventually grew that to 300,000 in sales. And by the time I was a senior. And when I was going to go to college, I was thinking, man, I can't run a business and go to college. So literally my senior year in high school, I ended up selling that business. And my sister was a business partner of mine, so we sold it. And I didn't really think about it after that. But what I'll say about that is I've always had that entrepreneur bug through college. I did startups. I was always that ideas guy. I love coming up with ideas. I went into my professional

career and I did that for probably 10 years. And throughout that whole trajectory of my professional career, I always had a business on the side. I always had a little startup idea that I was tweaking or a website. So I've always been entrepreneurial. I've always loved that. Even if it was just to scratch that itch on the side, my career just blew up. I mean, I've worked at AWS. I've worked at VMware, Salesforce, and other companies, smaller companies, but principal engineer all the way up to architect level. And just to answer your question, the idea of buying a business didn't hit me again until I read, coincidentally, when I was at VMware, a friend recommended like 20 books, right? And I listened, I didn't read them. I just listened to them, like audiobooks. Yeah, I'm not that crazy. I listened to them as audiobooks. And then I got towards the end of that list. And one of the recommendations after these books was

"Walker Deibel's Buy Then Build." And I listened to that. I remember driving and listening to it. And I was like, this is it. I literally, vividly remember driving. And I was like, this is it. And, you know, after that, after hearing the, you know, just the thesis, the high level overview, I was like, man, I've done this. I love business. Why am I doing all these zero to one, zero to one, or zero to 0.1, right? Never, never cresting and growing. Why don't I just buy a business? And that, that honestly was the, the catalyst. That was like, yeah, like three years ago. So like 2023, basically. Yeah, no, probably. Don't really know, like the October 2022. And then I was like, okay, I'll start it in 2023 in, like in earnest. So let's just say 23. Yeah. Wow. Okay. Cool. So you're, you're relatively early to the space, at least from like, when it got super popular online. So you kind of slid

into the space on accident before it really blew up, you know, with the influencers and stuff. Yeah. Before the Jeds of the world. I'm just kidding. No, no, no, no, no, like, I think at the time, I started just getting more familiar with it. I got on Searchfunder, looked in there for a few weeks, you know, and then started just gobbling up more information, more data. Will Smith's podcast, you know, Acquiring Minds, I'd listened, I started listening to that almost religiously, weirdly enough. And then I got to the end, I caught up and then I started going through the archives, right? Going backwards. I don't know a single searcher who hasn't gone through that entire library. Okay, good. Good. Because like, for the longest time, and now I'm just like, when I drive into the office, I listen to them. So I try to keep up to date with it. And I was a recently, like a few months back, I did a webinar on his, on his show. So anyway,

that, that gave me more experience, experience, at least hearing the stories. And that gave me more confidence. Yeah. So I ended up getting more plugged into the ecosystem, like you said. Okay. And so you decided, you know, end of 2022, you're like, Hey, this, this really feels like it's for me, you're binging me information. When you decide, when you made that decision, like, all right, I'm going to start doing this. How did you turn that into a tactical practice, you know, practice? Like, how did you actually start doing? How did you actually start searching? Yeah, I started slowly. Honestly, it was just like a side thing. But it eventually became a habit. So like, I was trying to build a habit, you know, that atomic habit. And my habit was every morning, you know, sit down, keep in mind, I'm from North Carolina. So my, I'm on the East Coast and all the companies I rattled off in the beginning, they're West Coast primarily. So my teams were on the West Coast. So I would, you know, wake up 7am earlier, just work on like, you know, go into like

all these websites. I had like a hundred plus brokers that eventually I built up that list. BizBuySell, of course, is the first one you started off, but then you started seeing, oh wait, these brokers have their own individual sites. So I would just literally open up all those tabs, see which ones were new, reach out. And that was kind of like my day. And then I would start scheduling meetings. And I want to say probably like 1500 total meetings, I would say the first few months, I was just a tire kicker. Like, honestly, like I was so enthralled by like the the CIMs. And it was almost like a mini MBA, you know, mini, I just like enjoyed like reading about how these business owners had done these things over the years, over decades, and just amazing stuff. And I think at that point, I was kind of like in my tire kicker phase. But then, yeah, eventually, most of us start off in that, most of us start in that tire kicker phase. So don't worry about that. Yeah. Yeah. That's great. So you're looking all these CIMs, you're kind of going through this,

you know, phase of kind of getting used to it. And then at some point, you're like, all right, well, when did it really change? You're like, you found something that was actually super interesting, or you're like, you know, maybe I need to take this a little bit more seriously, or I need to be a little more focused. Yeah. So over over the years, and the reason I think a confluence of events for me, like over the years, I had saved up money and, you know, gotten to the point where like, to me, I felt like it was a good pot of money that I had that I could utilize for business acquisition. So there was a lot of things that made me feel good about doing it. And then I guess the thing that really made it happen is, I would say two things, really, one of those Will Smiths podcast, or maybe it was a webinar, but I forgot who I want to say was one of the maybe Sam or Saudi or someone said send the send the damn LOI. And, you know, I was always

like, oh, man, this is like a super, super document, like it's a contract. So then like, now looking back, it's like, dude, it's just an agreement. But I mean, there's, there's clear, like, you know, respect that you have to have for like, all what you're saying in that agreement. But it's also like, it's just an agreement. And they still have to execute it. You're not going to be like the the prettiest one there, right? So I was always like jamming myself up and never going all the way through until like, I was like, you know, I'm gonna start sending these LOIs. And what ended up happening is I did get a business under LOI. And it was completely different from what I have today. I was kind of, so I kind of started, I should have said what my buy box was, and vaguely, the buy box was like North Carolina, specifically the triangle and Raleigh, or a tech business, right? Something that goes really fits well with my background. But I also had been talking to my father in law at that time. And he, he's like, super salesperson, he, he also owns a roofing

company. So this roofing company came up, and I was like, Hey, you want to tag team this with me? And we, we literally got this under LOI. And it was like $1.5 million a bit of business. And we got all the way through diligence. And one thing that just kept on like, scratching at us is like, it's very owner dependent, very owner centric, this guy, the other guys like the sales person, like, what if we just brought $3 million? Like, why can't we replicate this business, right? So we ended up saying no to that. And then that really, even though we said no, and we, we, we came to that conclusion quickly, which is good, even though we said no, it really, really, like, unlocked, if you know what I mean. And you probably had this, as soon as you get your first LOI accepted, it's like, Oh, I'm big leagues now, right? Like, it's possible. And that's what happened. And essentially, yeah, I'll let you ask a couple of questions there. But yeah, that's, I think

that was one of the unlocks. You're exactly right. I mean, there's this, it is a learning phase, like he goes through like the tire kicker phase, you know, you're feeling everything out. But you're right, there's something that clicks, like when you finally do pull the trigger and send an LOI, and especially if it's accepted, and you're going through diligence. So really, a lot of respect for you being able to identify that this was not the right fit for whatever reason and backing out. A lot of times people don't have that kind of discipline, especially when you're in diligence, like you mentioned, you went through diligence, so I imagine there's going to be a little bit of a, you know, dead deal cost and a little bit of some cost. Yeah. And it's hard to walk away. And so a lot of respect that you're able to do that. But then like, once you go through that process, you're like, Okay, I know what to expect. I've done this. I understand like how it works for me and what I don't want. And then all of a sudden, you're like, man, I've got a, I've got an LOI cannon here. Like when I find the right one, let's go. Yeah. Yeah. So yeah, eventually it went from like a shy pistol to like a Gatling gun, not really Gatling gun, but like I felt more confident. I

felt like it was like, at least maybe one LOI a week, you know, and then funny enough, I got another one that was pretty close to, to the not accepted LOI, but like, it was apparent that we were like the top two. So a buddy of mine who, he and I went to NC State, we did engineering undergraduates together, electrical and computer engineering, we did double major there. So I knew this guy was like, smart, but he's like way smarter than me. He went to MIT and got an MBA. And yeah, so he's a super smart guy, right? And he, he, he's also one of the first guys I talked to before I actually like, Hey, I came across this and I saw that he had spoken at a ETA conference. And I was like, man, I got to reach out to him. And basically, that was like six months before that LOI. So he also gave me some boost, right? Like, Oh, this is a guy that I know he's smart.

He thinks I'm smart. He thinks I can do it. So he kind of gave me that pep talk as well. But he also gave me like some numbers that I had never heard of, like I want to build a business at EV enterprise value of like 100 million plus in the next three years, I was like, dude, what are you talking about? But then like looking back, I'm like, that is possible. And he is like working towards that still. And I think, anyway, fast forward after that first LOI, I found another company in the triangle area, literally like 10 minutes away from from my house at the time, essentially a alarm alarm security company had been around 35 years. I was like, man, this is perfect. It's not tech, but it's like very technical still. And he and I, we partnered and, you know, we did a crash course on on that industry, very, very sticky stuff, very sticky revenue. RMR is the main lifeblood.

There's basically MRR, but for that industry. And yeah, that really piqued me as well. Like, like, piqued my interest as far as like, wow, there's these industries that have recurring revenue, sticky revenue. So that was also like one of the things I was looking for. So like as you, in the beginning, there weren't all these like master guru courses, right, or whatever. And I think now, a lot of this information is available. But also, even though it's available, people don't make the first step forward. They don't make that first step forward, and then the next one, and then the next one, and then the next one. So I think like, that's what those courses are aimed to do, which is to give you that motivation, kind of like I seek that out individually with my friends, talking to you and talking to others and my own curiosity, right. And also my previous experience as a business owner. So like, there was a lot of things that came together. But yeah, I think those were unlocks there. And all of that led to eventually finding the business that I found.

You know, I love that you touched on that too, because, you know, there's that saying if information was all that was needed, we'd all have we don't be geniuses with six pack abs, right. And especially now with AI, like the information is worthless. Everybody's got the same information. It's how you apply it and how you actually build that traction. And one of the things that I really liked about what you said is that, you know, it's a it's a growth phase, like you start off learning and you start off like, you know, tire kicking, and you start off like sending out an LOI and like, it's a it's a process. And just like you said, at that time, you could not imagine like your friend talking about 100 million enterprise value. It was not a concept, right. But then like you do this deal. And while you're like, no runner up on the LOI, and you're like, Oh, my goodness, now you're you're operating a business like, okay, I can see it, it's possible. Like, but the previous you could not have seen that. And that's what I mean. And the more you go through this, it requires personal development along with the business development. And then you kind of grow into the bigger version

of yourself. Yeah. So I'll tell you like how I came across Preferred Data. And then I'll tell you also like, how it is being in the driver's seat, which I think a lot of people may be curious. So so if you're kind of toning out, you know, zoning out, just please stay stay till the end, because there's a lot of nuggets here. But I will say like, yeah, so like, all these near wins, I guess, you know, were good. And it just gave me I had like a pattern, you know, mornings, I would do this and then squeeze these interviews and conversations with the sellers throughout. I will never had free time, free chance of time in my calendar. And that yeah, just continue to do that. And then eventually, I got new like MSPs was something that I was interested in. Coincidentally, one of the companies I didn't mention in the beginning was at the time called SolarWinds. Now they're called N-able. And I used to work there. I was a principal

engineer. I basically built out their full infrastructure that they now run on on Kubernetes at the time. It's like fresh shows brand new. So I designed and implemented that from scratch. And now that's what the whole company runs on. And that's the first time I heard of MSPs. And I always remembered, man, that's a really cool job. Like it's it was one of the things I wanted a business almost started after I sold my first one. Sorry, my camera keeps on jittering. So like you're good. I knew I knew about the term. And I knew like it was like, you know, something I could potentially do. And Preferred Data didn't come off as a MSP that actually went on the angle of a software company, which we are. So preferred data has been around since 1988. And essentially, they started out as a software company. And they built out this vertically integrated ERP software in the late 80s, early 90s that to this day,

we still have dozens of customers that utilize this and essentially hundreds of millions of revenue flow through the software from accounting to AR, AP to work orders to distribution to sales and everything that you can think of. This this solution does it. And I was blown away. I was like, man, these these guys developed something really cool. And what had happened is in the early or late 90s, early 2000s, they would had grown this book of business immensely. And they their customers were having network problems. They were having IT problems. Hey, the thing is broken. This or that. So they spun up basically like a quasi MSP line where they would they would soup to nuts, build out the whole network stack for the customer and be like, if you're going to run our software, you have to also, you know, have a standard on like what your your your server, your networking equipment and your IT and all this would look like.

So they they basically without knowing they started an MSP before the MSP term was, you know, heavily used. So fast forward to when I bought the business, one of the founders had passed away and weighed the the owner at the time he was looking to sell he was retiring, you know, had been in the business 36 37 years at the time. So this was his baby. And yeah, when I found it, I was like, man, this is perfect. I'm a software guy. I'm an engineer. I love IT. This stuff is like, super easy for me, right? Like I can wrap my head around it, not super easy, but you know, I can wrap my head around it. And and I have been able to really quickly. I was able to jump in. But yeah, that's the fact that it was also in North Carolina. So there's a couple of things. It's in North Carolina. So technically, it was in my my regional area that I was looking

for. And it's in the industry that I wanted, you know, that I look forward to heavy in the MRR. The only thing is like it's on the smaller side. So we we when I bought it, it was a 1.2 revenue and about 350 SDE. So it was on a searcher considered smaller side. And yeah, there's definitely some learnings from just that statement alone. That that I would love to talk about. But yeah, that's how the whole thing is like, you know, from when I started as a searcher to a few potential wins to finding a business that even though the size wasn't where I wanted it, everything else was ideal. And I think everything else is still ideal. But we can we can talk about that. Well, let's go right into that. Let's talk about like, you know, you've been you've been the owner for about 18 months now, talking about the

things that you really liked about the business going into it, that you're like, yes, I was right about this. And then, you know, maybe a couple of things that were challenges or things you didn't really expect, especially, you know, given the size of the business, it's a little bit smaller than you had hoped for. Yeah. Right off the bat, I think the MR, the recurring nature of the of the customers that we had, like, customers have been with us, like on average, 22 years, probably has gone down now that we're actually growing the the book of business. But that was huge. I think that steady revenue, and the fact that you have these long term relationships with the business really really has been phenomenal. I think the the software that we have is it's a moat, even in this world of AI, that can just quickly create AI based software. We're seeing that our customers are still like entrenched and really still need us and require

our assistance when it comes to like new features and, you know, porting out what they have and retraining dozens and dozens and dozens or even hundreds in some cases of employees is just not in the in the cards for them. So that's like, there's there's a there's a interesting thing there on like legacy software that I think is underrated. But also, one of the things that there was like low hanging fruit left and right, I think most of it has been picked now. One of them was the website. It was clearly like early 2000s still late 90s looking. If you go, if you're here, your business owner, potential business owner, go to preferreddata.com. Yeah, preferreddata.com like basically revamped it. And now, to us, it's like a lead gen. I want to say like, if I if I so it's not the day one, I put it on Cloudflare. And if I recall correctly,

we're probably getting like 100 visits a month, right, through some SEO and other stuff. I think right now we're like at 170,000 visits a month. So it's slowly also quite a jump. Yeah, yeah, yeah. We're getting more direct, like organic inbound as well, which is great leads as well, which is also great. So that was low hanging fruit. And then operationally, we were also using our software, but our software was not for an MSP. So within like six, eight months, after I kind of like, the first three months, I didn't do much change. But I kind of saw like, okay, there's a huge issue here, because we're using this software that's not for MSPs. And every single morning, we're going over the same topics over and over and over again, explaining the same problem from the beginning. So we invested in a PSA, which is a professional services automation platform.

And imagine like Jira, Jira technically is the PSA, but just like a centralized software that's like your command control center that all your statuses and details can be co located and brought together. So that that was huge. Another low hanging fruit. Software, what I like about this type, he's saying like low hanging fruit, but what really makes a difference though, is that this is your bread and butter, this is what you have a background in. And so if you didn't have a background in tech, then just jumping into an MSP and, you know, putting together your own, you know, ERP software, your own, you know, Jira software, like understanding that that was even a problem to begin with. And then getting the right solution and building it up low hanging fruit for you might be quite difficult for somebody who doesn't know what they're doing. And so yeah, and I think that's the case. Yeah, go ahead. Sorry. Yeah. No, I love the fact that like you really leaned into an industry where you had some, you know, some direct experience in like granted you hadn't been in MSPs, but you

understood software. And that's what MSPR is. It's, you know, software provisioning and administration. And the fact that you knew that and you're like, Hey, this makes sense. Even with the roofing opportunity. It's like, that wasn't your background, but at least your father-in-law was very into the business. And so, you know, it wasn't in this situation where you're like, Hey, I spent my whole life in software, I'm going to go buy a plumbing company, you know, cold turkey, you know, you at least thought about this as far as like, you know, how can I leverage my skill set to do better? So I say all that to say, like, what's what's low hanging fruit for you would not be low hanging fruit for somebody else. And I'm glad that you're able to recognize that. That is so true. I will say that I played to my strengths and even for like the roofing company, right? Like I'd already been talking to my father-in-law and like, like I had been with him in Texas when he was like looking at roofs and even in North Carolina, when he was looking at roofs. And I was like, what is stopping us, you know, doing a GIS data dump of all the metros and, you know, finding the roofs that are the oldest in the richest neighborhoods, you know, blah, blah,

blah. And I was like, in my mind, like, I'm sure no one else is doing this. Maybe the big guys are, maybe they, they, something I could probably do super easily. And anyway, the other low hanging fruit that I want to say is like the software side, it's legacy code, stuff I've never developed. But I also knew I was using Claude, like when it first came out, I was using God, I can't think of the name now, of course cursor, but like, there was an open source one, sounds like kangaroo. I don't know if you can, anyway, I didn't see your name, but I know like, like Windsor for something like that. No way before these guys, this was like the first like VS code that got uplifted to support LLMs. Anyway, I've been into this. And even when I was at AWS, I was into AI, like machine learning at the time. So like, I've always been super, super in tune with that.

And I was like, doing all these things, like even developing websites and things really quickly, before it became popular, like chat GPT, everyone was still just saying, you know, what's the best restaurant in town, right? Like, yeah, when I was over here using it to like develop stuff. So early on, before vibe coding became a term, I remember like seeing it on X, I was like, Oh, this is new thing happening. Funny enough. Anyway, I'll get into a tangent. But what I was gonna say is on the software side, I saw that as a clear differentiator that we could do. And it has panned out, it took a while, but basically getting all our software, all our code, all our source code onto GitHub, it took almost a year, by the way, because it was all on a file share. There was no Git, there was nothing that didn't know, you know, until it closed, I was like, Oh, wait, your code is on a file share. They had like, you know, folder copies named, you know,

the revision, it was like, fork upon fork upon fork, all my folders themselves. Yeah. So then, yeah, we moved it to Git, and that was like phase one, phase two is like, putting Claude onto it, right? And then training Claude. So like things that would take a developer three weeks to do, I was able to just kick it off. And then like 30 minutes to three hours, it'll be something testable. And now, one of our newest hires, Cody, fresh guy, he was in the Marines, he came back and started doing sales. And then he just, I think that company, something happened to it, and he was on the market, and he was like, interested, he's like, I do, I play with Claude all the time at home, I was like, I could see like, he was like, he was into it, definitely not computer science major, whatever from, you know, some big school. And I could just see like, he has that like learning and

curiosity and also, you know, being a vet, you know, he, he definitely, he has some rigor to everything he does. So it's penned out so well. The guy is like, within like three weeks, and actually within like a week, he was already doing more product productivity wise than a subcontractor who's been doing this for 40 years and that specific language that that that's a part of our software. And yeah, we haven't looked back since, I think, I think that that's how that also, you know, we're able to deliver faster, get paid more, and do it in like a fraction of the time. And that now we're like looking forward into like, we've had other opportunities as well, like helping build out other platforms, which is also very intriguing. So like, we're, we're trying to build out that software side. But then on the MSP side, we're heavily

focusing on cybersecurity going forward. Yeah. So yeah, I think those are the big three hanging, low hanging fruit, I would say the website, even though it doesn't look like it, like, I thought the brand, the fact that this business, I can go to someone and say, hey, Preferred Data has been around 39 years, you know, 38 years, whatever, you know, or four decades, right? Like to me, that has a lot of cash, a lot of like, oomph. And so we're playing on that. Also, the fact that we're regional, we have a software that specialized industry uses. So we have a lot of, sorry, I keep on freezing. We have a lot of things that are benefit there. And then the software side as well, you know, just implementing that and doing doing way better. Yeah, I love to hear it. I love it when, you know, the right buyer meets the right opportunity and things really do work out, especially since I know that, you know, especially with a small

business like this, I know that you had some pretty good key man risk with the owner and being able to build a relationship with the owner and you guys are working together and being able to move this business forward. That's been phenomenal for you. But like what we were saying earlier about how like, you're constantly growing through the process, right? So now you've been the owner for 18 months, looking back, like, I imagine you get, you get outreach all the time from people who are looking to, you know, maybe, you know, become searchers themselves, maybe go buy a business. You've got all this wisdom now, like, what's the biggest pieces of advice you give people who are interested in getting into space? Yeah, I would say get all the things I just said, like, you know, send the LOI, educate yourself, play to your strengths. Don't buy small, buy medium or large. Although I would say I was like, we're not the smallest, but the reason I picked PDC is all the things I've just went through. And I do think, like, now I have to get this company to the next

stages, which is not easy. So like, maybe I could have just bought at the next stage. But then also, I would have to spend more. So like, now I think, like, to double this business, I don't think it's impossible. And then, you know, continue to grow the business and pay down our debt services is more realistic than not. Especially, like you said, like, playing to my strengths. So those would be advice or, you know, things to consider. Definitely utilize your resources, your friends, your network, JED. Feel free to reach out to me, especially for cybersecurity. No, but like, seriously, like, all those things, like, they were not, I was self taught. So like, I made mistakes. I think, like, even buying this business, I did make some mistakes. And the next one I buy, there's going

to be a different level of rigor and probably more of apprehension as far as like, you know, should I do this or that there was on the first one, but like more of like, based on my experience in the last two years, do I want to take this risk onto the select, you know, those types of conversations will be more intense with actual, like you said, wisdom and understanding. But there's a, you know, there's a certain thing to being able to take risk, calculated risk, and, you know, knowing what you're buying, I guess. Yeah, awesome. I love it. A lot of times, especially when you're first starting off, you know, you, you don't really have that good measure for what calculated risk is going to be. I see it all the time with first time buyers who are like really hesitant about the idea of, you know, putting in like a five or $10,000 retainer for a lawyer or, you know,

15 grand for a QoE, but then almost no hesitation with the idea of like signing a personal guarantee for like $3 million. And I'm like, it's a little backwards. But it does require you to like, you know, you got to do the proper due diligence ahead of time. And at some point, you have to take a leap of faith and, you know, whether or not that makes sense for you. But you're right because the more you get into it, the more you realize how you, the risk is real and you really do need to mitigate it now and in the future, because you never know what that next opportunity is going to look like. Yeah, I'll hardly agree. I think like post close, there was like a sense of like, oh, I did this, right? And I think that kind of went away probably like after three weeks. Of course, you got to keep in mind there's other humans on the other side, right? And what the first business owner thing that came to me and I vividly remember is one of my

best employees, right? She had been with us for 36 years, had been with the founder since like year one, right? Yeah. She was like the longest tenured besides the, besides the founder. And she's like, I don't think I can do this. Like, I really like you as a person, but like, it's too much change too quick. And honestly, you know, the owner didn't like, you know, the seller didn't tell her, of course, like, why would you tell your most key employee like, hey, I'm selling business, by the way, you know, no warning. And yeah, like, I remember she handed me a letter with her resignation. I never opened it. I said, I was like, listen to me. This is where I'm coming from, you know, Bob this, I did this to get here. You know, basically, the with the SBA, I basically mortgage my home against all this. And I really want you to stay, you know, let's see, let me

know, think about it. I'm not going to open this comeback Friday or whatever day was. And let me know, like, after you think about it, what your decision is. And if you really want to, you know, move on and retire, you know, then I fully respect that. But you know, ended up she stayed for another year. And then she really did retire, but it was actually like a planned thing, right? But like, one, one thing I didn't do there is I really didn't know how important she was to this business. She actually was the key employee in my mind. I was like, Oh, it's the owner for sure. Right. Like everything I had like, everything I had seen, based on like everything he was explaining, I was like, man, this guy knows this stuff. He's like, he knows it top to bottom. But no, she was the one that all the customers called and they loved her. She was like that quintessential, like if I could replicate you, you would be like, the most loved company in the world, right? She just really, truly cared about her.

They were like friends, you know, she had been working with these people for 30 plus years, you know. And I did not know that because I never have talked to her. So that was learning. So how important, how important was that? Like just, just having the awareness early on to be like, you know what? And at this point, you did not know how important she was to business. And you're just like, look, I'm really in this. I'm really committed. I want to see this be successful. Please just hold off for a couple of days. And just by saying that, you got that 12 month transition, which I mean, isn't valuable in that honestly, it would have like, I mean, I would have probably solved and figured it out. But I remember when she, when I sat down with her, because I, the first few weeks, I was just like very like talking to everyone and getting familiar with them and you know, all that. And I remember the first time sitting down, and then she said that I saw little stars right floating around. I was like, oh, like high blood pressure probably just hit me. Super stressed. I was like, what? So it was definitely a shock. But no, like

that was probably like, because it's like, the first time I was, I hit an adverse event and like, hit adversity and you know, hit something that I wasn't expected. And could have technically, if I didn't buy, like if I didn't have a plan, which I didn't at the time, could have derailed the whole operation. It really could. And it's amazing because especially with small business, it really is just a combination of people. Like that's what you, what you learn. It's, when you first go into it, it's like, you know, what are the numbers, what are the sales look like, what's the recurring revenue and all that stuff's important. But in reality, the value of the business is the fact that you have a group of people who are able to create value that's greater than themselves. And so if you lose people, you know, at the wrong time or something, something like that breaks, the whole business can fall apart. Yeah, people reach out all the time and they talk about how like, you know, the assets of the business, what's the, what's the assets worth? And I'm telling them like, look, nine times out of 10, the assets of the people, you know,

that's where the real value is. And, you know, if, if you have one or two key employees walk out, like that's, that's enough to take your business, especially when you take out an SBA loan and you've got like, you know, some pretty, some pretty substantial debt service to cover. So you can't really afford a huge hit to revenue. Yeah, I will say that that was probably the first bump in the road. And then the way I started mitigating that one is I made a, in my mind, I was like, well, if, if AI can take a transcription and understand it and, you know, give me a summary, I think in the future you'll be able to do that with video, right? So I was like, Hey, let's record everything. You walk me through everything. So we did a bunch of teams calls like this and recorded her like explaining everything and basically training me on all the systems that she was aware of. And then we still have those. And now we've uploaded those to Loom. And Loom does this amazing,

like, summary and, you know, explains everything. So yeah, that was like, you know, like after I said that to them, like eight months later, that's when Loom came out with the video. It creates a runbook for you, SOP, et cetera. So very cool stuff. That was one way. And then also cross training. Before me, keep in mind, like the owner had been here 37 years. The employee I was just talking about had been here for 36 years. Our software developer had been here 21 years. So it was a long tenure. It was good stuff. Our technicians had been here on average, like 10 years. So like long tenure, good stuff, but also like that tribal knowledge, right? And I had like a barbell, right? I had, no, not even a barbell. What's a kettlebell? I don't know. On one side, a lot of people are going to be retiring. And this is one thing I didn't think about. There's going to be people retiring. I need to get new people in. So I have to cycle these people

through. And that means what does that mean? Double the headcount, you know, for whatever X amount of period. So that did the first year kind of sucked. So I had she was training her replacement. And then we got a new technician also. So he was being trained by the old technicians. And we also, the one, my employee who had been here 36 years, and the one that had been here 21 years, they're like, well, if she retires, I'm going to retire. So I was like a double package then. So then I had to like figure out how to replace that. So like, I think that I won't do that, do it, do it again. But looking back, I have been able to like manage that. And in some ways, it forced some growth in the business because we had to document, automate, replace, and streamline and do better operations with our PSA, with Claude, with different integrations.

So instead of requiring all this time and all this inbuilt tribal knowledge about how do you do something was like, okay, let's fix it once and fix it forever kind of thing. So like more of that DevOps mentality, which you know what I'm talking about, and process improvement, process optimization with technology. So like, yet again, bringing on, that's my thing, like, I'm so familiar with all these things. So bringing that in. And I think, I think that's, that's one big learning as well. Like, it's, it's been a prolonged, difficult transition, I would say. And we're on the other side of it. I think the next transition will be like, I have it in my goal with the business, that everyone that was with me when I acquired it, that they can retire through the business, right? That's a personal goal. So then that, that means yet, cycling through or growing

and bringing in new people. So that's kind of like the phase that we're in. Okay, tons of valuable nuggets there, especially that transition process. I know, you know, it must have been painful, especially early on, bringing on new people and cycling through just from a payroll perspective. But, you know, the silver lining is you get all those SOPs, you get to really see how the business really operates. And a lot of times it's, it's so easy to kind of like, look the other way and just kind of let things keep going the way they've always gone, you know, very hands off, I don't want to break the business. But by, you know, rolling up your sleeves and getting in it, you really have to see like where the opportunities were. And I imagine you're better off for it. Because now you've got new employees who know what they're doing. And you've got all these SOPs. And you can kind of see like, what is my entire, you know, operational cycle look like? What's the cash conversion cycle look like? Where are we, where are things stalling? Where are customers having trouble? Where can we be more efficient? You know, all the way through the, through the process. And that's got to be really valuable. Yeah. And we're not perfect like how you just described it. But like, it's definitely been

growth. I think we're way better than when I bought the business, for sure, even the first few months. We were growing customer count, we're growing MRR, we're streamlining a couple of things. There's a lot of like low hanging fruit that I mentioned, the ones I mentioned, but there's others as well, like we never had done price increases through COVID, through all the inflation cycle, through, you know, the early 20s, 2020s, like we didn't know price increases, which blew my mind. But also we have a good percentage of our customers that are not on contracts either. They just pay routinely, pay really well. It's just like a, you know, decades or years, right? So we're slowly transitioning those over to, to what we call our preferred plans, so they can become a preferred customer of ours, right? So they get a plane on top of that brand, right? So Preferred Data, and you pick the preferred plan based on the tier that you want,

and then we ensure that you're covered, you know, from every single layer from the firewall, all the way down to, you know, the endpoint, to the email, to, you know, the security around the year AI. And then we have a few handful of customers that have commissioned us to do research on to like how they can implement AI into their factory floors and things like that. So it's just more growth. And that's the part that really excites me, because if we transition all our customers to preferred plans, our, our business will basically double. Like, like that's the, that's the estimate estimation there. And then we also resilient. It's more resilient, too, because you got contracts in place. It's, you're, you're improving the financials of the business as you're doubling the size. Exactly. And, and standardizing some of these customers are like on piecemeal. So like maybe they have email protection, that's it. And then some have email and, you know, endpoint protection, that's it. And then we have like, there's a huge opportunity

there. One of the first things I did was create what I called the Christmas tree chart, all our customers, and then all the services that they consume. And then if they consume that service, it's green. If they don't consume that service is red. And that's the Christmas tree chart. And basically, there was a lot of red. And the goal is to make it as much green. And then that just looking at that, that's a lot of red. You can make a, my gut feeling at the time was like, wow, that's a lot of red. We can, if we fill those in, we can double maybe triple the business, but then look at the data. If we do fill those in, transition them to preferred plans, that's doubling the business for sure more. You know what I can't get over right now is that for people who are either watching or listening to this conversation, and they're listening to you talk about the changes you're making your business, you can feel the passion. I can feel that you're excited about it. I can feel like this is something like you're really in the weeds. And that's what's required. Like it's required for someone who actually loves what they're doing, actually wants to be involved

and wants to get their hands dirty and like get into the details of every aspect of their business. Like I can feel that, like the way you talk about the improvements you want to make, the systems you're changing, like the growth that you're shooting for, like that's the kind of passion that's required. If you, if people are wondering, how do I know I'm going to be successful at this, or at least have a shot at being successful, you need that level of passion. Yeah, I think it's just who I am also. Like I said, I got a taste of this early on. Things were just like working. It could have just been, you know, e-commerce was just going through like a crazy run up in the early 2000s. But now we're going through a crazy run up with AI and IT and cybersecurity with AI, and how all these agents are going to attack all these businesses. So now everyone really does need cybersecurity, right? And everyone wants that. And you're on the front lines of it. Exactly. And that's where we're positioning ourselves as like a provider of AI integration, cybersecurity, and IT. If you go to our website, that's literally our slogan,

or our subtitle, PDC, and then right under it, that's AI/Cyber/IT. So that's literally what we focus on. And I will say that the next, the remainder of this year, so in September 1st, we launched our first channel program. We're basically partnering with alarm companies to deliver our services to their customers. And the first partner that we have is that one that I almost bought in Raleigh. And I reached out to the owner. I was like, "Hey, you don't know me, but I know you and your business. And I would love to talk to you about something." And I sat down with him and explained the whole idea. He was like, "Wow, let's do it." So if you are a provider of anything, like an alarm or an accounting firm, or you work with other commercial

clients, reach out to us, see how we can partner. And I think Jed will have this conversation as well. As a business owner, my main thing is I want to grow this business, first and foremost, to benefit the business and my team members. I don't even call them employees, like they're my team members. And then if I get that right, in the long term, delayed gratification, I will pay off my loan and I will have a more resilient, stable business. Hopefully, at a different multiple size, as far as I know, right now, we're at 1x or 1, whatever. So I want to double, triple, quadruple this business. And I think with this channel program, I don't think anyone else is doing it. And we want to capitalize and really execute where we're growing that. And that's the next phase. So one of the first things is like,

you start as a searcher, you don't know what you're doing. You start bumbling around and maybe you fill out your buy box. Fill out your buy box, work with Jed, by the way, if you haven't, or just go online and figure it out. Determine what you're good at, what you want to buy, what you want to be in, and then start sending LOIs. Then you'll hit a single, double, maybe a Homer. I think I hit a single, especially on the size, but maybe a double on the location and the industry. And then my next goal is-- But there's still the possibility to turn it into a Homer or a grandson. Oh, yeah. I think that's the idea there. And then get an LOI by your business, but to what Jed was saying earlier, you have to have a passion of like, it's not just like, oh, I'm going to operate it and leave it where it is. It's also like a sense of like, what do you want to build? So I want to build a resilient business, 10x where I

bought it, and acquire other businesses, fold them in, and just build something that I can enjoy and be proud of. I don't know. To me, it's fun. It's like an exciting game. It's always a challenge. So if you don't like challenges, don't do it. Well, I could not have said that any better myself. Yeah, if you don't like the challenge, then you're going to have a hard time because the challenge has never ended. You have to really, really enjoy what you're doing. And I think, I mean, like I said, anyone watching this can see that you enjoy what you're doing. I think a big piece of that is your passion for building something bigger than you had and bigger than yourself. This entrepreneurial drive you've had since high school, as well as the fact that you leaned into something you're already good at, something that you actually enjoy. I think it makes a big difference that you had this whole career in software and tech, and then you're like, hey, great, let's keep that going. Let's keep building in software and tech. And I think it's a great model for other searches to look at. Josh, this has been just full of nuggets.

So if other searchers are watching this and like, hey, I'm kind of interested in the MSP space, or if I'm a self-funded searcher, I want to get a little bit more understanding of what Josh is doing and what things to look out for, how best can they reach out to you? Yeah, just reach out to me at josh@preferreddata.com. If you own a business, like I said, or you have a firm that works with other businesses, reach out to me to see how we can help your book of business and your clients, as well. But reach out to me, josh@preferreddata.com. Mention that you heard me through Jed, and then well, we also have like this deal like anything, if you bring your business to us and you got referred through Jed or anyone like even Will Smith, we try to cut you a deal. So because you're a searcher, if you're listening to us, you're a searcher. So I want to help you. I think this is an amazing career decision. So just do it. As a little bit of a plug, and I will absolutely

plug this, especially coming from the software background. But I was talking with Scott Crosby. He's a HVAC owner out of St. Louis, pretty active on LinkedIn, wonderful guy. We got lunch just a couple days ago. And I was lamenting to him about how so many small business owners avoid cyber security. Like they don't do anything as far as cyber security. Even the basics, like just getting in the cloud, putting them a firewall and doing double authentication, like just the basics, right? And he was saying, for him, he was smart enough to know that that's the first thing he did. And he got a provider and got on board right from the beginning. And I cannot express how important it is to have some sort of cyber provider who is watching your back. It is not prohibitively expensive. And at the same time, it will absolutely save you. I know you have. I know you've seen the massive increase of cybersecurity attacks on small and medium-sized businesses. It's the highest it's ever been, Q1 of 2026. And because of things like Claude and AI agents,

because now any high school kid can do it. Anybody, the amount of exposed endpoints out there is wild. And if you like just doing the basics, just do the basics. So yeah, I can't recommend you more, especially when it comes to just putting in a little bit of security around the business you're doing. I forgot to mention you and I, we went to Dallas to the open. That's right. We went to the McGuireWoods conference last fall. Yeah, for Independent Sponsor. Yeah. And I brought up to you this idea of like the QoT, remember? Everyone does the QoV quality of earnings, but no one does the QoT. And we launched that, the Quality of Technology diligence report. We launched that like a few months after. We've had a handful of searchers come through us. More recently, I just completed one this week, where we do that deep dive for their acquisition and then also help them post-close, itemize the things that they need to

do. So definitely, I've been shamelessly plugging the whole time. I did that on purpose because I know Jed and he probably won't get upset. But seriously, I think it's a, to me, it's one of those important things like for your business. It could literally kill you overnight. There's no somewhere or anything. Well, like you said, I mean, if you don't have that technical background, you wouldn't have realized that when you got in the business, none of my code is backed up. Everything is in files on some written computer somewhere that is a power outage away from losing it all. Yeah, if you're on this call and the term Git or GitHub has never crossed your mind before, you really do need somebody in your corner helping you on the tech side because the world is only getting more and more digital and you need to make sure you've got some safeguards protecting you. Yeah. And the one thing that I will say is like, even I glossed over some of those things because I was not even aware like your deer and headlights, like even, even if you're the most

technical person, it's easy to overlook things because you're like, Oh, the assumption is that is happening, right? Because that's what you would do. You would do that five years, 10 years ago, early on in your career, right? But no, it's definitely that's why you get a QoE. So that's why we launched the QoT. And I think we're, we're the only provider. And if you search that thing, we're like the only thing that comes up on Google. So Preferred Data. That's one of the things I think that we're doing to help the searcher community. So yeah, super important. Love it. All right, Josh, thank you so much. Really appreciate your time. And thanks for telling us your story, especially like what it's like, you know, in the business, I think that's the real difference. Like once you're in the seat operating, you know, how that changes your life. So thanks again. And I'm excited to have you on again in the future. So we can hear about how a lot of these changes are implemented. And maybe there's a future add on or tuck in we can discuss. Oh, yeah. Yeah. Yeah. Let's do it. All right. Thanks, man.