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THE FRONTIER LINE
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THE FRONTIER LINE
Jeffrey Brewster- Founder, BT Valuations
Welcome back to the show, guys. We are so excited to be in studio today. We've got a special guest teed up for an interview. He's a friend of ours, dave. Good morning, how are you? First?
Speaker 2:of all, welcome, Dave. Good morning All good. Good morning, Lane. Good to be Thankaluations joining us from Frisco, Texas.
Speaker 1:And we're going to dig into BT Valuations and Jeffrey's history and how he finds himself as a I'm going to say a financial analyst, a master financial analyst. Bt Valuations does financial models for us. They do valuations for lots of different types of companies. Jeffrey, welcome to the show.
Speaker 3:Thank you. Thank you for having me and being among friends. It's a great, great time to be here.
Speaker 1:Absolutely, absolutely so. Appreciate you joining us. So, as customarily did, the way Dave and I have kind of figured this out for our guest interviews is, rather than trying to kind of read a bio, we'd like to hear from you, jeffrey, let us know and let our listeners know, and in however much detail you feel compelled to share with us, what brings you from the early beginnings of, you know, wanting to be a financial analyst to today, with you know, founding bt valuation uh, yeah, well, it's kind of funny because I can go as far back as you know, somewhere near fourth or fifth grade uh, I can tell you funny stories about the fact that watching my grandfather read the Wall Street Journal he was a sixth grade educated coal miners kid, worked in the coal mine a little bit, was running his own business and he's reading this Wall Street Journal and I said, what are you reading?
Speaker 3:So he starts sliding over the A section to me, after he's done with it, the B section and finally I graduated to the C section of the Wall Street Journal and I'm like, wow, people do this for a living. He goes, yeah, he goes. They get paid pretty good money to do it. I said, sign me up Anyhow. Really, really a fascinating upbringing. You know to be around somebody who is an entrepreneur and you know, I always thought that to be a valuation professional. Or I at one point in time thought I was going to go to Wall Street. That was my you know, every kid's dream in the 80s. Right, You're going to go be an equity analyst on Wall Street.
Speaker 2:Gordon Gekko, I think was the time right.
Speaker 3:You're all going to be Gordon Gekko, yeah yeah, exactly, I mean just to give you a little bit of background on me. I'm in seventh grade. I'm reading the Wall Street Journal in study hall and the industrial arts teacher walks by and he looks at me and he goes Brewster, what are you reading? I said Wall Street Journal. And he goes yeah, I know that. But what are you reading? I said, well, I'm trying to figure out the bond inflation data here and how that's going to impact our overall portfolio. And he looks at me and he goes. You know, most seventh graders are interested in girls. You're interested in bonds. And I said, well, look at this, I got to get the money before I can get the girls. You know that, right?
Speaker 1:Yeah, that's incredible. That is a very that's a surprisingly young age to find interest in something that's sophisticated the bond markets. Thank you for sharing that.
Speaker 3:Yeah, yeah, and so it just my my life just kind of lock stepped after that. I was one of those kids that very you know you run across very rarely where they go to college and you go. I know exactly what I want to be when I walk out the door with my diploma, and that was I wanted to be into equity analysis, and so my path didn't go like you would normally think. So it really kind of came through the capital markets. So a lot of business valuation or financial analysts that you would meet today probably I would say majority of them came up through what I would call the accounting path. You know CPAs, things like that.
Speaker 3:I came at it from a capital markets path and really my accounting brother, I love them immensely. When they do a great job, oh my goodness, it is just like the heavens open and the skies are clear and you just see this wonderful thing path in front of you, and when they don't, it's just storm clouds and hurricanes ahead. Um, and so I I have a lot of respect and love working with the folks who are on the accounting side, be it, you know audit and the tax. You know the taxes is always changing right. The winds are all it feels like they're always changing in this country, and then you start talking about internationally and then it just gets so incredibly intense and immense that you just sit back and you go wow, how do we carve up what we're going to do here at BT Valuation?
Speaker 3:Because I've done transfer pricing studies before and it's what's great about it is you can pick and choose pieces from that and go this makes sense right here and that's really what we do. You know we were trying to think about the whole process and go what are we going to run up against to make it a little more difficult that we can start planning for right now? So that, hopefully, that's a little bit of a background on. How did I get here? Yeah, going all the way back to the coffee table at uh Pops's Greenhouse in Marcells, illinois.
Speaker 2:Thank you, that's no, that's fantastic. What a fantastic story Do you think you know? You mentioned that. I mean growing up around blue collar and kind of seeing. You know the, the, the value, uh, the values there. You know how did that that that had to it impacted you? How cause you've? You've seen kind of all sides of the financial market from the. You know the person running their own business trying to make ends meet all the way to. You know corporations trying to strategize on tax and capital finance strategies. You know how does somebody like you? How do you take that? How do you square those? What do you take from your past and how does it affect how you look at? You know the broader markets.
Speaker 3:Yeah, dave, I mean the first thing, and I honestly have to have the people in my life that had, I don't know, 15, 20 minutes of such an in-depth conversation with me that it impacted me immensely. You know my grandfather running that small business in Marcells, illinois which, by the way, my sister is running to this day. So he started in 1959 and still going Incredible yeah, just in 1959. And still going Incredible. Yeah, just fantastic to see that happen. And then my uncle, who was a president of an advertising corporation from Peoria, illinois. He would come in and just speak truth to me on a regular basis and then, almost on the opposite end of the spectrum was Uncle Louie who was the head of the spectrum, was Uncle Louie who was the head of the union in Illinois.
Speaker 3:Boy, you talk about sitting at the table and it's almost like the United Nations. You get to sit there and just watch it, go across the table and try to figure out which side you're going to defend or learn from. So you know, dave, you asked me a great question. How does that boil down? And what I've found in my professional walk is taking those experiences and going. Where are they coming from? What questions should I be asking to learn more about their perspective and objective, because it may be that I'm observing it so much differently than they are that I need to change my approach or understand my analysis a little bit better.
Speaker 3:And questions, you know, just curiosity that has driven me, probably since you know, like I said, driven me probably since you know, like I said, that you know since I was 10 years old that curiosity of what is that? How does that work? How would that all work together? How would you make money doing that? And then the, the wheels just keep turning. And then you, you meet somebody that's in the, you know the IT space and you go okay, so explain to me how that melds in and makes this easier. And all this comes up. You know, people who know me, who are around me long enough, know that eventually our conversation is going to get to a flow chart. Yeah, it just happened. My wife sometimes has to call timeout before I get there. She's like no, no, no, you don't have to flow chart it for me, I get it.
Speaker 1:Well, the curiosity is a great strength when you're required by profession to get into the details, the finite, the granular details of the things you do in valuation and modeling. Walk us through a little further. You know college experience when did that go? And you know early job placements before you know that led up to you deciding to form your own company.
Speaker 3:Yeah, wayne, I'll tell you what I still go back to, blessed, absolutely blessed, with some of the people that are in my life. So I was sitting at a really at a you know internship lunch, as getting ready to get out of an undergrad and I'd played college football, college football days were done, time to get out into the workforce, and I'm having. I'm having lunch with the marketing officer of a local telecommunications company, still around today, called Consolidated Communications. So Steve May and I are having lunch and Steve goes, you know, for a finance guy. I can actually talk to you. He was the head of marketing, so you can imagine some of the conversations that he was having with the finance team. Um, so I get an internship with steve and and, mind you, there was no intention on this I all of a sudden latch on to the 911 implementation team and they need somebody from finance to help them understand the pricing for this, along with understanding the engineering for this. So here I am as an well, I guess I was getting paid, but it was minimal wage an intern, and I'm sitting in the room with the head of finance, the head of marketing, the head of engineering and they're just pouring into me. It was one of my favorite first jobs coming out of college because I ended up taking a full-time position with them. But back to the internship. I think I may have been one of the only interns in that company ever to go to Disney World for a convention as part of my job, because I went there and we were doing the pricing on the 911 and talking to the telecommunications equipment companies and that honestly catapulted me in my career.
Speaker 3:Yeah, because you know that time period, that 90, 92 time period. I mean telco is about ready to just take off, the internet is about ready to explode, oh yeah, and. And we're right there, and so I'm having conversations. When somebody is talking to me about dense wave dual multiplexing later on I'm like, oh yeah, I know exactly what that is. And we are, you know, chat, chat, chat, chat. People are like wait a second, you're a finance guy. How do you know that? Like, well, I got it. I got a chance to spend a lot of time in the CEO, the central office, and they're like, okay, you do know what you're talking about if you talk like that. Yeah, so that was just a fascinating corporate job where I got to see finance, marketing, sales, accounting all really come together and operate I might brag a little bit, but really kind of operate in a fluid manner.
Speaker 3:We took one of my. I love to talk about this. One of the things that we did was, as they were doing pricing for long distance services. They were coming to me and they're going, hey, listen, we need approval for this. I said why don't we just automate this process so that if you get an ROI, an expected ROI greater than 12%, you get automatic approval? So we put that in place and then, all of a sudden, pricing started coming through to me and we started getting some massive projects.
Speaker 3:This is when, like, t1s were big. You know, you put a t1 in the ground. Everybody's like oh, you know, you must be serious. No, I don't know, they're up to t3 trunks and you know things, the size, the sizes that I never would have imagined back then. But what that does is is when you start bringing everybody together and they get an equal seat at the table and they're heard. Now, all of a sudden, you have credibility and, wayne, that is what we try to bring into every engagement. We want people at the table that have input and they're being heard, so that they know that when that valuation or that financial analysis comes out, they're going. Oh, I had input in that. I may not necessarily agree with 100% of the output, but I had input and they heard me. So that has carried forward specifically into where we're at today. You know, some stops along the way were you know, financial markets. If you ever wondered if that movie, the big short, was the documentary or a movie, yeah, it was a documentary documentary.
Speaker 3:I lived it, frank, my, my partner lived it on the other side. We, we found out that we were on opposite ends of the spectrum during most of that Not controversial to one another, but definitely in the same end of the spectrum or different ends of the spectrum same spectrum. So you pick up things as you go along. I was an equity analyst and portfolio manager during the Internet bubble. As you go along, I was an equity analyst and portfolio manager during the internet bubble. So there are things that you know have impacts in your career and you and you just you go. Oh, okay, we've got to make sure that that never happens again on my watch.
Speaker 2:Yeah, one of the things that, uh, that we know and I'm kind of curious speaking of you know how it impacted you, you, you, you had a, you had a little bit of a sports career. Yeah, a little bit of one. You talk about it occasionally and I mean I, I also know from you know playing sports, I mean it. It can have an impact on you and and then later in life too, I mean certainly, I would imagine for you as well.
Speaker 3:Right, yeah, absolutely, dave. I was an offensive lineman. You know one of those. You know the non-glory position, right? I always tell people you know. And then, when I coached offensive line, I said gentlemen, this is going to be the, this is going to be the sport that gets you ready for life, because you'll spend most of your life working in obscurity and only getting noticed when something goes wrong.
Speaker 1:Yeah.
Speaker 3:Yeah, I love that.
Speaker 1:Yeah, yeah, that's a good, that's a good way to frame that.
Speaker 3:And so you know we'd get we, we. We used to laugh or like we, as more as coaches than players, cause we hated it when they said this to us as players and the coach would come out and go. Well, you know, I had one God bless him, bill leg. He was from West Virginia. Coach leg had come out and he just looked around. I was like gentlemen, today we're going to teach you all how to dance like hippo Some no truer words.
Speaker 1:Maybe we're ever spoken. Yeah, oh yeah, when those, when those, when those defensive linemen are trying to come through or when those linebackers are trying to push through. You know it gets noticed when they make a hole and get that qb. So it's a it's a very important role, you know, protecting your quarterback from the line there.
Speaker 3:Yeah, and today. Now, I mean, the athleticism of the offensive line is just astonishing. I mean they would have never looked at me with the level of athleticism I had compared to what is required today out there for the people. I'm like they're running how fast. I'm like wow, I may have done that in my car, yeah right right.
Speaker 3:So you're gonna play, but in all, in all honesty, I mean it. It really, when I played in college, it really taught you time management. Uh-huh, you, you could not afford and I was. I knew what I wanted to do. I wanted a finance degree and I knew I was not going to be afforded the we'll just say luxury of time that some athletes had, and it was going to be intense and I was going to have to maximize everything I could and I really wasn't coming from a background of, you know, tremendous capital or tremendous wealth. So I, you know, there was still some struggle. There's still some things that you have to, that you have to work through. Uh, I and I and I'm and again, I think I'm all the better for it.
Speaker 3:Um, I'll tell you one quick story. It was, it was funny cause I? Because I actually was pretty decent at math in college and I was sitting there in class one day and I was ranking, getting the top scores, because they were actually putting them and handing them out, and one young lady looks over, she sees my score, she goes how are you getting these scores? And I'm like, well, it's really not that hard. And she looks at me and she goes all right, I'm going to come by, can you help me? I'm like sure.
Speaker 3:So that night she comes by to what we call study table, like if you're a freshman and you're a athlete, they don't know how good you are at going to class or studying, so they have you come to study table every night after practice. It's brutal. I mean, you eat, you get ready, you go to study table until 930 at night and you're like this is crazy. So I'm sitting there studying and Colleen comes by and she sits down next to me and we start talking math and one of the coaches walks by and he looks at me down and he's like Brewster, good to see that you know your limitations and you need to ask for help when you, you know that's a good thing you're asking for help. Colleen was like ready to tell the coach. I'm like no, no, no. I'm like, yeah, coach, it's great that she's here for me so funny.
Speaker 2:I love it.
Speaker 3:That's a great story yeah, colleen's dad, you know, slid a couple checks over my way too to help me. Uh, you know, as I was tutoring her through, she passed and she was all right, awesome, very good, very good.
Speaker 2:Well, that's great. So you've I mean, in doing all of these things, I mean you, you, you, you you talked about, uh, you know your early successes, uh, with the industry.
Speaker 3:You know what, what stands out for you, you know impactful project wise, that you've got that you had an opportunity to work on blessings just keep coming through of what we get to see and what I, when I look back and I go, wow, you know that that was something we got to work on. Um, one that I, I, it's a little it's a little related to football.
Speaker 2:Uh, when I played football, I blew. Isn't everything? Isn't it all the?
Speaker 3:center of the universe, right, it keeps coming back, coming back. Um, so I'm sitting there and I blew out my knee in college. They repaired it, I got back out. I played three more years. Um, I'm doing evaluation. Oh, it's probably. It's probably close to 15 years later and it comes across and it's.
Speaker 3:This new technology is called synvisc, but what this is is they inject it in between the knee, in the, in the, into the knee, in between the, where your, your medial meniscus would be, and it builds it back up again, gives it kind of a cushion. So now you don't have to have a knee replacement, right? So I'm doing the valuation on this. This is a. You know, this is a. They're a little past the initial new drug stage and I look down and I'm looking at this and I so I'm talking to the folks who have us doing the valuation I said, you know, I kind of feel like this might be one of those hair club for men commercials.
Speaker 3:You know, I'm going to be a user of this. Fast forward 10 more years and they want to inject something into me because I tore my labrum in my hip and they're ready to inject something in there and they go. Have you ever heard this stuff called Synvisk? Oh, wow, I looked at the doctor and I said I did the valuation on that. Before he goes, he closes his folder. He's like well, you start telling me about it. Then. Wow, stuff works, it's. You know it really that is, that's fantastic but yeah, fun, fun things like that.
Speaker 3:And you know, when you go back and you look at all of these projects, I mean a couple of them were I would call like watershed moments for me in my career, where you do valuations. We were doing one, uh, where I was looking at the an asset-backed security portfolio, and they wanted us to take down about a hundred million of this in a portfolio and I I basically said no, because little did they know, but I did that their current portfolio of over five and a half billion dollars was so heavily concentrated in this type of investment that there's no way they should have taken any more of it type of investment that there's no way they should have taken any more of it. And I said no, and come to find the next morning, come to find out that, uh, some Chinese investors who had wanted this and backed away. So our portfolio group went and bought another 150 million of it and at that time you realize that the financial markets were ready to crack.
Speaker 3:Yeah, I mean, it was really getting so stressed and so thin in there that it was one of those moments where I literally went home to my wife that night and I said I think it's time for me to go. This is just one of those things that I just don't see how this recovers. Well, I was wrong. It was much worse than I ever thought it could be. Wow, and that that, essentially, it was about eight months before the great liquidity crisis, oh, 2008. Wow, Boy. And.
Speaker 3:And you just didn't realize how much leverage was behind the paper that you were looking at yeah um, another one of those moments that was kind of a negative one is when somebody from there and I'll just say it, who was? Because they get named in, uh, the big short, yeah, um, somebody from merrill lynch was sitting there telling us about how wonderful these CDOs were, and I just asked a couple of questions and it really started clicking with me quite quickly that the leverage there wasn't like one or two times, it was like four and five times. Wow, and you're going. There's just no way that a financial institution like ourselves should ever be touching anything like. So, yeah, you, just, you just have those water. You know those like lightning moments in front of you, that your analysis and your gut feeling and all of the feedback that you're getting from outside, it's all coming together and it's all pointing you in a direction that you know run, don't walk. Sometimes it's run, don't walk.
Speaker 2:Well on that. So what is I mean? What is your and sorry, I think I've monopolized some of the questions, wayne, so I'll jump in here what is you know? Do you feel like times where you feel like you've got the perfect crystal ball, like you've been doing this so long, you understand it, you know it, and then the decision makers don't listen. How often do you run up against that, like I wish I could convince them that this is this. Or do you find that you're able to make the case, more often than not, through a sober kind of explanation of what's actually going on and get them to come to your side? Or do you feel like it's always a battle? It's one battle just to try and kind of, you know, evaluate something and get it as clear as possible, take all the variables into consideration and then play the game of convincing decision makers that you've got to follow this, what I'm suggesting. How do you navigate that?
Speaker 3:yeah, it it is. Uh, there's a lot of rocks in the water and what you just described, uh. So let me see if I can tell you how we navigate the ship through all that. Yeah, first of all, there's always going back to the sailing, or, or, or, you know, boating, uh, uh, story. There there's always things under the surface that you perhaps can get over the top of, and sometimes not, but understand, there's always something under the surface. It's just whether or not you're going to hit it, and that's the mentality I go into a lot of these projects with, and one that I will tell you is a success, uh, that we were able to convince some people to see it our way. And then I'll share one where it's not, and that story is still ongoing.
Speaker 3:The success is when you come at a project and you get to that valuation number, in this case, and then the other side is so far away in their number if you're humble enough to go back and go all right, team, what did we get wrong? Let's stress, test this I get more confident when our analysis holds up to intense scrutiny that we put on it, because we know where the bear, we, we, we know where those bones are buried, right, we know where the okay. If they press on that, this whole thing blows apart. We already know that. So if we can go in there and go, all right, let's stress it, let's figure out where it's at.
Speaker 3:Um, in this case, I went back to the team I said listen, they're talking about a $20 million transaction. You know we are um, they're coming back with like seven and a half million dollar offers. What did we miss? What, please, please, tell me, what did we miss? We went back through it again, just excoriated and beat the snot out of our models and came back. We're like worst case scenario, this is a $19 million transaction. I'm like, okay, fine, here we go, pick up the phone, talk to the other side's investment banker, come to find out they were using their model that was designed for distressed companies. That's what they typically bought. And I said this thing is not distressed, it's throwing off nearly $5 million in cash every year.
Speaker 3:And it was great to hear an investment banker go oh wow, we didn't look at it that way. Okay, now I'll bring that story to close, because it was a fantastic story. We get to the closing table, bang $19.5 million transaction. So we're kind of doing a victory lap, yeah, but wait, there's more. Five months later there's a working capital true up. She calls me. She goes Jeffrey, you're never going to believe the conversation I just had. I was like all right, tell me what is it. She goes we had the working capital true up conversation. I'm like, oh yeah, that's right we're. We're probably about six months. You know, that's where the true up, the first true up, happens. She goes yeah, they're cutting me a check for $3 million, wow, wow.
Speaker 1:That's incredible.
Speaker 3:That's fantastic, you just want to gloat.
Speaker 1:You're so happy for your client, right that's incredible, yeah.
Speaker 3:And and can I say that when we were going through that process that I knew that's exactly where we were going to be? No, but I knew we were going to get closer to 20 than seven. Yeah.
Speaker 1:Right.
Speaker 3:Um, now there's there's times where you, you lead people through this process. You basically tell them I know what the difficult questions are going to be and they just don't want to hear it. And at that point this one's still playing out. They had a, they had a capital raise that they tried several years ago and got no takers. And, dave Wayne, here's what I tell you Too often, people like silence because it doesn't hurt our feelings.
Speaker 3:We don't have that uncomfortable feeling when somebody tells us the truth. Right, silence is so much better because now we can play a story in our head oh, it wasn't right for them. Oh, they didn't understand it. Oh boy, they're missing the opportunity of a lifetime.
Speaker 3:Silence I think a majority of the time is a killer. It's a killer. I would rather have somebody tell me forthright what they don't like. What is your problem with me? We can address that. I can't. I can't address silence.
Speaker 3:Yep, and one of their, one of their fundraisers. They're one of their fundraisers. One of their earlier rounds that they tried to raise was met with silence. And I asked him. I said okay, when you went out to raise at this number, what were your investors, what were your potential investors coming back to you. What were their issues? Well, we never really heard anything from them.
Speaker 3:Okay, so here we are today, fast forwarded to 2025, doing the evaluation work for them and we're telling them. You know numbers that they just don't want to hear, far lower than they could have ever imagined, and we were walking them through the process of over the last five years. You said this, but you didn't execute, so back then, you got silence. Today, I'm afraid, if you go out there again to the market to raise capital, you're going to have a similar experience. It's going to be silence. You don't want that, and they just they were so embedded into their idea that they couldn't hear what the market was telling them, and when you don't listen to what the market's trying to tell you, the market will stop telling you. I think that's what happened to them. I think silence became the response. You can't figure out silence, man. These are incredible, great story.
Speaker 1:Great advice. Yeah, jeffrey. I mean Dave and I and the Invictus Sovereign team have seen so many nuanced kind of, and experienced things like this, either with our own companies or with others that we've watched, and we feel like we're steeped enough, dyed in the wool, as it were, over nearly 30 years, to say the same things. We'd rather know the good, the bad, the ugly, so we can pivot. And there's no, there's no bliss in ignorance and and and we see, especially in startups, you know, because everyone's ideas they're so excited, it's so emotionally charged, everyone's so invested in their own idea when they've created, when they're the creator of an idea, and they convince themselves about how the market should view the value of this idea, without properly substantiating demand or market pressures or any of those levers that you guys masterfully consider. You mentioned Frank a minute ago and we've all gotten to know Frank Deutschman, your partner there at BT Evaluations, also genius guy. I mean, you two are a dynamic duo. Tell us a little bit about Frank and why you guys are so good together.
Speaker 3:Oh well, it's on multiple levels. We're also friends, right, which makes it even more fun. I get to tease him about things at home and he gets to tease me because he knows my family and it's really interesting because, again, frank, just the unbelievable skill set that he brings such a personable guy Curious. He's warm, sincere. You know I do a darn yeah he's not here so I can say it he's darn near just like a lovable guy. You know, you just want to like him.
Speaker 1:That's been our experience of Frank as well. We absolutely agree with that.
Speaker 3:And just a really skill set that is very unique. You know he was a complex financial modeler for BlackRock, so sometimes that's all I have to say to somebody and they go oh, oh rarefied air yeah.
Speaker 3:I got to tell you a quick story. So he and I actually we met. I was on my front sidewalk getting the mail or something, and you know they were coming by and they were working with the Republican Party here in Collin County, Texas, and I ended up chatting with his wife for a little while and she kind of goes you really need to meet my husband. So Frank comes by and we talk and like, hey, let's grab coffee. So we go over and have coffee at a local coffee shop and we're sitting there talking and you can see people around us, cause, again, frank's complex financial modeler did some work, a lot of work on the MBS side.
Speaker 3:I was on the other side buying mbs and you know we're sharing experiences of who, we know what we did and you're getting. You know you're getting into that. You know seven uh, differentiation layers of people that you know you're like, oh, you knew that person from lehman. Well, I did too. I bought bear, you know, and so she just started and you should just aim that coffee shop people just all of a sudden their heads started turning and looking over at us like who are these jokers? Because this is, this is something else. This is a high level conversation, oh yeah, and and we've just taken it ever, you know, just taking it from there and it's, it's such a great combo because I can, I, I, I reach up and get the big vision and try to understand the vision of the client and then transfer that over into the granularity of what we're looking for, and I can go so deep and then Frank and I both take it deep and then we just have this, you know, wonderful work product and you know, really, I believe, a very, very valuable output for the client that we then say, okay, we hope, because this is what we really want and it's just, it's a tagline, but this is what we really really hope for is that the clients get more in value than they pay in fees.
Speaker 3:And we'll, we'll tell them that we'll, we'll tell them how to do that. You know, we'll do purchase price out. Well, it's really a I've done this before where we'll do a goodwill valuation or a personal goodwill valuation for tax purposes, and I'll say, oh, by the way, on your day one accounting, you can hand this over to somebody and they can probably use this work to start the purchase price allocation work. You may have got a twofer here and people can't believe. I would have just told them that Now. Yeah, maybe I should have charged a little more for that, but you know who they're going to come to and they need the next one.
Speaker 1:Yeah, you know, I I actually endearingly refer to your scope of work as punching holes in happiness, because I, the CEO who is willing to accept the the, you know, getting all of his ideas kind of punch punch full of holes and exposing the flaws in the logic, is so valuable. And the CEO who's, who's humble enough to learn and listen and pivot and make the adjustments to make it an airtight plan, is really the CEO the wiser. That, I think, is a more successful probability of a startup, because you really want to be presenting financial models and projections that are conservative, that can withstand the scrutiny of it, particularly if you're raising capital from the institutional markets. And you've mentioned some of these big names. You know the Black Rocks of the world, these are very, very serious people and you go put a pro forma in front of them with these flowery, rose colored lens perspectives and you get. You get less than five minutes of attention and they close the book and it's over and there's no there's silence.
Speaker 1:You don't even get a chance to explain right, but if, if you but but a good team who's serious about raising capital and serious about taking what you build and tailoring that to the capital markets with insight and experience and then delivering something that can withstand all of that scrutiny. It gets you in the room Because a lot of the times raising capital in my experience over 30 years there's layers. You've got decision makers that operate on hot cognition and that's more of the vision and the story and the overarching compelling story or narrative about why an opportunity is good, but they're almost always screened by their analysts. The first meeting or two you know almost always has an analyst like screening numbers and kind of looking at things so that decision makers aren't wasting time on something that's not legitimate, and so it's almost like having a very airtight valuation. An airtight financial model with good conservative projections gets you through the gatekeepers and it opens the doors to decision-making and actually landing that capital.
Speaker 1:And that's been my experience and so we've put such a high value and high priority on working with you and Frank and building these models for what we're doing at Valley Forge modeling power models and modeling data center stuff and industrial and land leases and all of the different components of what we're working on, and I think we've been working with you and Frank maybe over a year now and we've gone through so many iterations, and it's very insightful to have these deep dive, granular conversations about what makes the model tick and how we're presenting this to certain investors and how different investors actually need to see different things right when we present to them, and so it's been a real pleasure working with you and Frank on lots of these issues, dave you've got the next question I was going to say on that.
Speaker 2:I mean, you know, just to dovetail into what Wayne's saying, I mean it truly has been a pleasure. We've learned also a lot and you know, and I think you know, in this sector. I know you've got some interesting personal experience in in the nuclear side of things we talked about. We've been talking about nuclear more and more and I think that's gotten you excited, jeffrey. But but in, in, could you talk about, you know, I guess, one of the things you know, since we're for our listeners, since we talk a lot about energy and infrastructure, I mean, okay, give it to us. I mean we, we sort of know, we like to think we know the answer on the side, but when we know that's why I'm putting you here you're the professional Tell us about, tell our listeners about, the energy and infrastructure sector right now. What's going on in the space? How do you, how do you see it from your vantage point?
Speaker 3:yeah, you know geographically, I'll just tell you you, you never really understand how susceptible your grid is until you find out how susceptible your grid is uh we found out during snowmageddon here in Texas, right, and you understand that the infrastructure in the United States was never well, I say never.
Speaker 3:It's not ready for the power demand that is on the cusp. It is in some ways already here. I mean, I think I read the other day that Google is agreed to, uh, you know, almost governing down their power usage during peak demand periods, like you got Google saying, yeah, we'll willingly do this. That's pretty amazing. Uh, my background, you know it's really more from my personal background. I watched one of the last nuclear reactors being built in the United States up until I think, when they put one in Georgia. I should have checked that, but I think it was Georgia. They put one up most recently. Um, it was in 1979. It was in LaSalle County, illinois, Commonwealth. Edison put up a nuclear reactor and I just I watched the towers. I mean literally where I lived, on the farm, I could see him putting up the towers and boy that I have questions, uh, you to imagine as a curious kid. And then I found out my cousin who read the wall street journal.
Speaker 1:Yeah.
Speaker 3:Yeah, that's right. By the way, one of my, one of my first investments was El Paso electric, because they were shooting up nuclear power plants in New Mexico. I'm like that's where it's at, let's go. So, um, plants in new mexico, I'm like that's where it's at, let's go, awesome. Um. So watching that and understanding the power that was available, you know relatively clean and and in almost no environmental impact, we weren't really even talking about environmental impact at the time. You know 1979, I mean in 1979, we're talking about the blizzard of 79 uh in the midwest and I mean I'll never forget cbs out of chicago was broadcasting. Is the earth?
Speaker 3:cooling yeah yep, and they were. They were. They were saying this is what it would look like if we have to live through an ice age. They were literally putting that out on the airwaves, gentlemen. And so you're sitting there going, wow, what do we do? How does this work? What's the next thing that we do to grow? Right, we had no idea that the internet was going to demand as much power capacity as what it does. We had no idea that mining for cryptocurrency was going to require the electricity that's equivalent to a small country. Now let's layer in AI on top of that, and then who knows what's next? That's the thing that we sit here today the what's next after AI.
Speaker 3:Let's look past that. What does that look like? It's demanding more energy and when you see, you know, depending on the reports that you read, some people have said that you know. You, on the reports that you read, some people have said that you know, there you've got a purchase power agreement between what used to be three mile Island and and Microsoft. Some of those others have said that you know, through backdoor channels, microsoft really has an equity ownership interest in that place. Now, you know, reports vary on that. Nonetheless, microsoft is making a play, absolutely. They're making a play on power. I don't know, is that the new currency? Did we just miss the digital currency wave? Did it just go to power and units? Those are the things that kind of wake me up at three o'clock in the morning and I go. What if we're trading power units instead of dollars and lira and euro? And what if that's what it looks like?
Speaker 2:Well, what do you see in the broader? I mean the capital markets. I mean Wayne and I report on this all the time and so much money has gone into energy infrastructure and into ai in general. I mean companies that are literally coming out of the gate. I'm you know, this is a whole, probably other episode or you and I talking offline about valuations in the ai space, because I mean, I've talked to people like they, it's, it's, it's like no, no, it's like no one's ever, no one has ever seen the types of valuations coming out so quickly with ideas, truly before they're even executed. So you, you layer in all of that money. I mean, how do you? I mean, you see that, we see it. I'm assuming you see it on your side. That's where, that's where most of the capital market is is putting resources today Is that fair to say? And then probably also then in the health, I would imagine.
Speaker 3:Yeah, well, and interestingly enough, those things are so closely integrated. You talk about the ultimate place for a large language model, the medical field. You know large language models will thrive in that. Yeah, agreed, and so you just everything that you've ever you know. Remember, we used to talk about monetizing your data, and now what we're talking about is getting that into an LLM so that it can be basically analyzed, synthesized and utilized in a way. Yeah right, so yeah, that is an incredible, incredible use of AI.
Speaker 3:Now I may, you can, mark the day. I may be just horribly wrong on this. I've grown through and lived through the internet bubble, the telco bubble almost one in the same um the liquidity bubble and and I don't know, am I going to live through the ai bubble. There will be survivors. I don't know if it's the way we see it today. In fact, I'm going to confidently say that AI will have morphed and changed so much from where we're sitting today by the time we are able to point at the winners and losers, that we won't hardly recognize AI then compared to what it is today.
Speaker 3:That's, I know, very general, very. But here's what also I know the capital markets hate being behind, you know. So there's some people out there that really hate being behind and they're willing to lose a lot of money to be in front of the race. You know they call it sometimes the bleeding edge for a reason. Yeah, um, you don't know who the winner is going to be, right, I mean, we still probably chuckle when we see somebody who has an AOL email account, right, yeah, but remember when they were going to dominate the world?
Speaker 2:Yeah, oh yeah, and I and I thought, you know, for the longest time and I knew it would happen someday. I didn't know how it would happen. I didn't see Google, you know, taking arrows, and they are. You know OpenAI and especially with OpenAI's announcement to do a browser. I think everybody's probably all of our own personal experiences. We're not necessarily going to Google anymore for a lot of these questions and they're having to, I mean, recalibrate, and it's something I didn't. I didn't think it would happen like like this, and and here we are.
Speaker 3:Yeah, I'm doing a lot of study, uh, in ancient history now on the Roman empire and and you know how many people were ever, you know, walking through the Roman empire roads and just going. Yeah, you know, walking through the Roman Empire roads and just going. Yeah, you know, someday this is all going away, there's going to be another superpower that'll make this one look like ancient. You don't do it when you're walking down the road, right?
Speaker 1:No doubt, jeffrey, we're coming up on the top of the hour. We want to be mindful of your time, we want to make sure we can get you, you know, back into the flow of your day here. So, kind of a final thought, and it doesn't necessarily have to be our project, but what can you say about a project you're currently actively working on that really gets you up out of bed in the morning? What are you really excited to be working on right now at BT Valuations?
Speaker 3:Yeah, we've got quite a few that are really exciting and and just watching that, you know we're helping people kind of through the transformation process either the transformation of moving their business out into the hands of somebody else, moving it out into the hands of family members you know I E other people uh, those are, those are really exciting. I mean literally growing up in a small business, you just see that transformation or that transfer happen and we can, and when it can happen seamlessly or it never, it's never seamless, there's always bumps, but when you can manage through that process, it really gives you quite a bit of satisfaction to watch and know that you helped in that process. Now the other also, you know, helping people grow. This is a really, really challenging time. The scrutiny on people's financials, projections, expectations one might say it's at an all-time high. We are looking at again going back to AI we're talking about from an exciting standpoint, just looking at what that can do from an analysis standpoint, that now that allows people to step back and look at from a more objective standpoint.
Speaker 3:What are these data points that we're looking at? How do those come together? What do we need to be watching for? People go all right, you're here and two years from now is where you want to be really. What's going to happen between now and then. Here's what we can help you today with to be ready for when you're going to need to call that audible at the line and they're bringing the full blitz and you weren't expecting all that all at the same time. Don't worry, you're ready. Your training, your time with us has gotten you ready for this day. We'll get you there. That's, that's the fun stuff and that's again the work where they're doing with Invictus, and what I really like to tell people is that it's so, it's so collaborative, because back where we're sitting, we get to go oh yeah, remember when we did that for them. Well, that's a. That would probably be very, very helpful if we pull that in and lock that into what we're doing right here and that that's what our clients get to benefit from.
Speaker 1:I love that, Jeffrey. We're so appreciative of you spending an hour with us in the studio today. Hopefully I'm sure the listeners will love this. When we get this out there, We'll go ahead and wrap it up with a big thanks. We look forward to continued work with you and Frank as we continue to make our own models evolve. So appreciate listeners chiming in and hopefully you'll join us on the next episode.
Speaker 2:Absolutely. Thank you, Jeffrey. Thanks everyone for listening. Until next time on the frontier line.
