{"version":"1.0.0","segments":[{"startTime":0.0,"endTime":3.03,"body":"hello and welcome to another episode of"},{"startTime":1.38,"endTime":4.74,"body":"well capitalized I'm your host Bobby"},{"startTime":3.03,"endTime":6.6,"body":"Kingsbury managing director at MCM"},{"startTime":4.74,"endTime":8.37,"body":"Capital Partners and today we're gonna"},{"startTime":6.6,"endTime":10.74,"body":"be continuing our education on the due"},{"startTime":8.37,"endTime":12.929,"body":"diligence process and today we have with"},{"startTime":10.74,"endTime":15.509,"body":"us kelly lamb ran from Key Bank"},{"startTime":12.929,"endTime":17.88,"body":"talking about Bank diligence so Kelly"},{"startTime":15.509,"endTime":20.1,"body":"thank you very much for for joining me"},{"startTime":17.88,"endTime":22.38,"body":"yeah if you wouldn't mind just give us a"},{"startTime":20.1,"endTime":25.74,"body":"little bit of background on yourself and"},{"startTime":22.38,"endTime":27.779,"body":"sandy key and then we can start sure"},{"startTime":25.74,"endTime":30.869,"body":"so Kelly lamb Hren I'm the regional"},{"startTime":27.779,"endTime":33.75,"body":"credit exec at a key Bank and I've been"},{"startTime":30.869,"endTime":35.85,"body":"there for coming up on 22 years so I've"},{"startTime":33.75,"endTime":38.07,"body":"been there my whole career I started at"},{"startTime":35.85,"endTime":40.59,"body":"key right out of college I went to Miami"},{"startTime":38.07,"endTime":44.01,"body":"University I started there in their"},{"startTime":40.59,"endTime":45.329,"body":"credit training program and did did a"},{"startTime":44.01,"endTime":46.98,"body":"bunch of training to all throughout the"},{"startTime":45.329,"endTime":50.19,"body":"summer and then got into the middle"},{"startTime":46.98,"endTime":51.87,"body":"market space as an analyst I took a"},{"startTime":50.19,"endTime":54.059,"body":"sidestep into the corporate bank for a"},{"startTime":51.87,"endTime":56.64,"body":"couple of years I hated that job and"},{"startTime":54.059,"endTime":58.62,"body":"then I came back to the middle market as"},{"startTime":56.64,"endTime":62.1,"body":"an associate for a couple of years and"},{"startTime":58.62,"endTime":63.96,"body":"then got my credit Authority about 17"},{"startTime":62.1,"endTime":65.909,"body":"years ago and so I was a junior credit"},{"startTime":63.96,"endTime":68.34,"body":"officer and I just expanded my credit"},{"startTime":65.909,"endTime":70.53,"body":"role throughout the years from the"},{"startTime":68.34,"endTime":72.51,"body":"Cleveland Market in Cleveland and Akron"},{"startTime":70.53,"endTime":73.74,"body":"in Columbus and now I have a team of"},{"startTime":72.51,"endTime":75.81,"body":"folks that helped me manage"},{"startTime":73.74,"endTime":78.689,"body":"middle-market credit for the Great Lakes"},{"startTime":75.81,"endTime":80.759,"body":"which four key is all of Ohio Indiana"},{"startTime":78.689,"endTime":88.47,"body":"and Michigan so it's a lot of windshield"},{"startTime":80.759,"endTime":90.42,"body":"time yes yes so how does key just for"},{"startTime":88.47,"endTime":91.619,"body":"the viewers at home how does key define"},{"startTime":90.42,"endTime":92.82,"body":"the the middle market what size"},{"startTime":91.619,"endTime":95.67,"body":"businesses are you typically"},{"startTime":92.82,"endTime":97.95,"body":"underwriting key to finds the middle"},{"startTime":95.67,"endTime":100.95,"body":"market from about 10 million in revenue"},{"startTime":97.95,"endTime":103.259,"body":"to about a half a billion and the"},{"startTime":100.95,"endTime":106.079,"body":"majority of our borrowers fall in that"},{"startTime":103.259,"endTime":108.299,"body":"tend I would say less than a hundred"},{"startTime":106.079,"endTime":111.299,"body":"million in revenue the outliers of the"},{"startTime":108.299,"endTime":114.06,"body":"big companies there there are a handful"},{"startTime":111.299,"endTime":117.27,"body":"of them but in terms of volume its it's"},{"startTime":114.06,"endTime":119.969,"body":"definitely in that 10 - less than 100"},{"startTime":117.27,"endTime":122.909,"body":"million dollar revenue space great so"},{"startTime":119.969,"endTime":125.7,"body":"let's get into the the M\u0026A process and"},{"startTime":122.909,"endTime":128.58,"body":"you know from from a legal or from a"},{"startTime":125.7,"endTime":130.229,"body":"bank diligence standpoint what"},{"startTime":128.58,"endTime":132.569,"body":"information do you generally require"},{"startTime":130.229,"endTime":133.55,"body":"upfront from the companies either from"},{"startTime":132.569,"endTime":136.91,"body":"buyer or from the company"},{"startTime":133.55,"endTime":139.55,"body":"itself what we're looking for are three"},{"startTime":136.91,"endTime":142.04,"body":"years of historical financial statements"},{"startTime":139.55,"endTime":144.56,"body":"balance sheet profit and loss statement"},{"startTime":142.04,"endTime":146.93,"body":"of cash flows from an usually from an"},{"startTime":144.56,"endTime":148.19,"body":"outside party sometimes that gets a"},{"startTime":146.93,"endTime":150.11,"body":"little tricky because if a business"},{"startTime":148.19,"endTime":151.46,"body":"hasn't had a lot of debt they haven't"},{"startTime":150.11,"endTime":153.47,"body":"had a lot of financial statement"},{"startTime":151.46,"endTime":154.97,"body":"requirements so do they need to be"},{"startTime":153.47,"endTime":157.31,"body":"audited no of course not"},{"startTime":154.97,"endTime":159.38,"body":"no not at all not at all but that's"},{"startTime":157.31,"endTime":161.03,"body":"that's where and then we if there's an"},{"startTime":159.38,"endTime":163.31,"body":"interim statement we look for you know"},{"startTime":161.03,"endTime":165.26,"body":"as of a September and then the September"},{"startTime":163.31,"endTime":167.42,"body":"of the prior year so we can calculate"},{"startTime":165.26,"endTime":172.61,"body":"the trailing 12 months over the last 12"},{"startTime":167.42,"endTime":174.65,"body":"months of revenues EBIT etc and where we"},{"startTime":172.61,"endTime":176.57,"body":"usually come up on statements that are"},{"startTime":174.65,"endTime":178.67,"body":"either company prepared or maybe they're"},{"startTime":176.57,"endTime":181.01,"body":"just a compilation from the accountant"},{"startTime":178.67,"endTime":183.08,"body":"will generally require a quality of"},{"startTime":181.01,"endTime":185.03,"body":"earnings and the reason for that is that"},{"startTime":183.08,"endTime":187.22,"body":"you want to you want to validate what"},{"startTime":185.03,"endTime":189.2,"body":"your assumptions are and sort of test"},{"startTime":187.22,"endTime":192.17,"body":"the the financials a little bit in terms"},{"startTime":189.2,"endTime":194.51,"body":"of accuracy so and there a lot of a lot"},{"startTime":192.17,"endTime":196.91,"body":"of times they're after the the sale"},{"startTime":194.51,"endTime":198.59,"body":"process we're making some assumptions on"},{"startTime":196.91,"endTime":201.739,"body":"add backs and so we need to validate"},{"startTime":198.59,"endTime":204.32,"body":"those and quality of earnings will give"},{"startTime":201.739,"endTime":206.33,"body":"that to us so are you is the bank doing"},{"startTime":204.32,"endTime":208.16,"body":"additional work or does the bank"},{"startTime":206.33,"endTime":209.84,"body":"generally rely on the quality of"},{"startTime":208.16,"endTime":212.15,"body":"earnings performed by a outside"},{"startTime":209.84,"endTime":213.98,"body":"accounting firm we generally piggyback"},{"startTime":212.15,"endTime":216.61,"body":"off of your diligence we're not trying"},{"startTime":213.98,"endTime":219.53,"body":"to make this an onerous process where"},{"startTime":216.61,"endTime":221.87,"body":"we're gonna require a bunch of separate"},{"startTime":219.53,"endTime":224.57,"body":"people doing the same work so we"},{"startTime":221.87,"endTime":227.09,"body":"piggyback off of off of what your what"},{"startTime":224.57,"endTime":231.17,"body":"what the what MCM in your case would"},{"startTime":227.09,"endTime":232.79,"body":"require so so why does the bank require"},{"startTime":231.17,"endTime":234.59,"body":"you know just for the business owners"},{"startTime":232.79,"endTime":237.47,"body":"that listening why does the bank require"},{"startTime":234.59,"endTime":239.03,"body":"this information for what purpose so"},{"startTime":237.47,"endTime":241.31,"body":"what we're looking at when we do a"},{"startTime":239.03,"endTime":244.13,"body":"transaction is we're putting a certain"},{"startTime":241.31,"endTime":245.36,"body":"amount of debt on on the books and we"},{"startTime":244.13,"endTime":248.03,"body":"need to make sure that there's the"},{"startTime":245.36,"endTime":250.18,"body":"ability for that debt to get repaid we"},{"startTime":248.03,"endTime":253.04,"body":"look at the leverage of the business"},{"startTime":250.18,"endTime":255.739,"body":"defined really by the cash flows the"},{"startTime":253.04,"endTime":259.01,"body":"debt to EBIT to us a total funded debt"},{"startTime":255.739,"endTime":261.049,"body":"to EBIT which means in our case and then"},{"startTime":259.01,"endTime":264.08,"body":"senior funded debt so senior funded that"},{"startTime":261.049,"endTime":265.94,"body":"would just be keys so senior lender to"},{"startTime":264.08,"endTime":266.76,"body":"EBIT and then the total would be if"},{"startTime":265.94,"endTime":268.95,"body":"there's any"},{"startTime":266.76,"endTime":272.76,"body":"sub debt or jr. capitulate on top of"},{"startTime":268.95,"endTime":275.48,"body":"that so as negotiations might might be"},{"startTime":272.76,"endTime":277.98,"body":"going on entrepreneurs may hear some"},{"startTime":275.48,"endTime":280.17,"body":"terms that they may not be familiar with"},{"startTime":277.98,"endTime":281.01,"body":"like cash flow recapture or revolver"},{"startTime":280.17,"endTime":283.38,"body":"availability"},{"startTime":281.01,"endTime":286.38,"body":"can you describe or define some of those"},{"startTime":283.38,"endTime":287.76,"body":"for them just a you know the most common"},{"startTime":286.38,"endTime":290.85,"body":"terms that they might not be familiar"},{"startTime":287.76,"endTime":292.62,"body":"sure working capital availability or"},{"startTime":290.85,"endTime":295.2,"body":"revolver availability we just want to"},{"startTime":292.62,"endTime":298.26,"body":"make sure that the business has enough"},{"startTime":295.2,"endTime":300.18,"body":"liquidity to you know going forward to"},{"startTime":298.26,"endTime":302.85,"body":"meet their needs so the worst thing you"},{"startTime":300.18,"endTime":305.4,"body":"can do is use some of the revolver the"},{"startTime":302.85,"endTime":306.66,"body":"line of credit to fund your deal and"},{"startTime":305.4,"endTime":308.04,"body":"then all of a sudden the next week you"},{"startTime":306.66,"endTime":310.14,"body":"have to meet payroll and there's not"},{"startTime":308.04,"endTime":311.7,"body":"enough money there you need to you know"},{"startTime":310.14,"endTime":313.98,"body":"you need to account for those absent"},{"startTime":311.7,"endTime":316.68,"body":"flows and your taxes and then your"},{"startTime":313.98,"endTime":318.69,"body":"payroll when is your insurance due maybe"},{"startTime":316.68,"endTime":320.58,"body":"it's only an annual insurance payment or"},{"startTime":318.69,"endTime":322.77,"body":"quarterly or I I don't know exactly how"},{"startTime":320.58,"endTime":324.39,"body":"some of that work works but it's not a"},{"startTime":322.77,"endTime":325.8,"body":"monthly number but if that number is due"},{"startTime":324.39,"endTime":327.66,"body":"right after closing you didn't leave"},{"startTime":325.8,"endTime":329.58,"body":"enough revolver availability to help you"},{"startTime":327.66,"endTime":331.53,"body":"pay for it and you haven't collected a"},{"startTime":329.58,"endTime":332.91,"body":"bunch of receivables yet we just need to"},{"startTime":331.53,"endTime":335.13,"body":"make sure there's enough cushion there"},{"startTime":332.91,"endTime":336.99,"body":"so what in your definition then what"},{"startTime":335.13,"endTime":339.15,"body":"would be enough cushion so draw down on"},{"startTime":336.99,"endTime":341.16,"body":"revolver at close what would you like to"},{"startTime":339.15,"endTime":344.88,"body":"see in terms of availability ten percent"},{"startTime":341.16,"endTime":348.66,"body":"no more than twenty percent I would say"},{"startTime":344.88,"endTime":350.28,"body":"it's about it it depends on the size and"},{"startTime":348.66,"endTime":353.01,"body":"and the nature of the business you know"},{"startTime":350.28,"endTime":354.72,"body":"it's less if there is an inventory"},{"startTime":353.01,"endTime":356.64,"body":"component if it's just a service"},{"startTime":354.72,"endTime":358.26,"body":"business that's not that's receivables"},{"startTime":356.64,"endTime":361.53,"body":"based so that you know if there's no"},{"startTime":358.26,"endTime":364.23,"body":"inventory it consumes less cash but I"},{"startTime":361.53,"endTime":366.36,"body":"would say it's generally between I want"},{"startTime":364.23,"endTime":368.01,"body":"to say a half a turn of events on maybe"},{"startTime":366.36,"endTime":371.46,"body":"okay you know businesses are all"},{"startTime":368.01,"endTime":373.26,"body":"different though we look to the owners"},{"startTime":371.46,"endTime":375.78,"body":"and to who've been through the cycle"},{"startTime":373.26,"endTime":378.12,"body":"before and you guys to help us through"},{"startTime":375.78,"endTime":380.43,"body":"that conversation and making sure that"},{"startTime":378.12,"endTime":382.32,"body":"there's enough liquidity there and what"},{"startTime":380.43,"endTime":385.32,"body":"about cash flow recapture so cash flow"},{"startTime":382.32,"endTime":387.9,"body":"mur capture essentially means so if you"},{"startTime":385.32,"endTime":389.28,"body":"we underwrite to a base case and we make"},{"startTime":387.9,"endTime":392.46,"body":"sure there's room in the covenant"},{"startTime":389.28,"endTime":395.42,"body":"however if you outperform we we take a"},{"startTime":392.46,"endTime":399.17,"body":"percentage of that to pay down the term"},{"startTime":395.42,"endTime":401.18,"body":"and the reason for that is that we've"},{"startTime":399.17,"endTime":403.22,"body":"done a deal based on the enterprise"},{"startTime":401.18,"endTime":406.13,"body":"value and there's not usually there's"},{"startTime":403.22,"endTime":408.8,"body":"not a lot of collateral there as a"},{"startTime":406.13,"endTime":411.62,"body":"secondary source of repayment to repay"},{"startTime":408.8,"endTime":413.09,"body":"the debt so an airball yeah another term"},{"startTime":411.62,"endTime":416.39,"body":"that you may hear collateral shortfall"},{"startTime":413.09,"endTime":419.36,"body":"if you will and that so that the reason"},{"startTime":416.39,"endTime":422.45,"body":"we want over capture is that if a"},{"startTime":419.36,"endTime":424.16,"body":"downturn then does come the leverage is"},{"startTime":422.45,"endTime":425.75,"body":"brought down a little bit a little bit"},{"startTime":424.16,"endTime":428.21,"body":"in the years that the performance has"},{"startTime":425.75,"endTime":431.48,"body":"been really good and amortization zong"},{"startTime":428.21,"endTime":433.28,"body":"term loans have stretched market you"},{"startTime":431.48,"endTime":436.34,"body":"know will go up to ten years on an"},{"startTime":433.28,"endTime":438.23,"body":"amortization if you down that back a"},{"startTime":436.34,"endTime":439.94,"body":"handful of years in my career we really"},{"startTime":438.23,"endTime":442.25,"body":"weren't doing anything more than seven"},{"startTime":439.94,"endTime":444.62,"body":"yeah just a handful of years ago so"},{"startTime":442.25,"endTime":447.56,"body":"because of that stretching of that"},{"startTime":444.62,"endTime":449.6,"body":"amortization is also why you want we"},{"startTime":447.56,"endTime":451.46,"body":"want some of that recapture in the years"},{"startTime":449.6,"endTime":454.82,"body":"that you've that you that you've"},{"startTime":451.46,"endTime":457.28,"body":"outperformed and also the deal is such -"},{"startTime":454.82,"endTime":458.96,"body":"that it doesn't really benefit the"},{"startTime":457.28,"endTime":460.79,"body":"company all that much to just sit on a"},{"startTime":458.96,"endTime":463.01,"body":"bunch of cash you really can't do"},{"startTime":460.79,"endTime":464.6,"body":"anything else with it something unless"},{"startTime":463.01,"endTime":467.27,"body":"the bank says it's okay I mean it's not"},{"startTime":464.6,"endTime":469.04,"body":"like you can take a distribution or you"},{"startTime":467.27,"endTime":470.42,"body":"know you'd have to get banks consent for"},{"startTime":469.04,"endTime":472.79,"body":"that because we really sort of lock that"},{"startTime":470.42,"endTime":476.42,"body":"down until you know leverage is in good"},{"startTime":472.79,"endTime":478.04,"body":"shape so there's really - in order to be"},{"startTime":476.42,"endTime":479.78,"body":"sitting on a bunch of cash on the"},{"startTime":478.04,"endTime":481.55,"body":"balance sheet really doesn't it's it's"},{"startTime":479.78,"endTime":484.13,"body":"not all that beneficial no it doesn't do"},{"startTime":481.55,"endTime":487.48,"body":"anybody know right because we're also"},{"startTime":484.13,"endTime":489.5,"body":"we're paying for that money right -"},{"startTime":487.48,"endTime":490.79,"body":"questions as a follow-on to that now"},{"startTime":489.5,"endTime":492.23,"body":"what what if I'm a business owner and"},{"startTime":490.79,"endTime":494.45,"body":"I'm hearing that I'm talking about cash"},{"startTime":492.23,"endTime":496.31,"body":"flow recapture and I'm outperforming"},{"startTime":494.45,"endTime":498.08,"body":"you're taking some of the the cash way"},{"startTime":496.31,"endTime":502.16,"body":"but what if I want to invest in some"},{"startTime":498.08,"endTime":505.16,"body":"growth growth capex so it's net of that"},{"startTime":502.16,"endTime":507.62,"body":"number so it's it's really the operating"},{"startTime":505.16,"endTime":509.81,"body":"cash flow so what the the cash flow of"},{"startTime":507.62,"endTime":511.64,"body":"the business is generated - all the"},{"startTime":509.81,"endTime":514.22,"body":"fixed charges and the capex is part of"},{"startTime":511.64,"endTime":515.72,"body":"that calculation and so you know if you"},{"startTime":514.22,"endTime":519.17,"body":"wanted to do that we've already taken"},{"startTime":515.72,"endTime":521.09,"body":"that into account so if if the"},{"startTime":519.17,"endTime":522.13,"body":"performance really killed it but you you"},{"startTime":521.09,"endTime":524.98,"body":"wanted to do"},{"startTime":522.13,"endTime":527.23,"body":"investment that's our that whatever's"},{"startTime":524.98,"endTime":528.99,"body":"leftover is already smaller so we've"},{"startTime":527.23,"endTime":532.5,"body":"taken that into consideration already"},{"startTime":528.99,"endTime":535.0,"body":"and so when when we were talking prior"},{"startTime":532.5,"endTime":537.01,"body":"you had mentioned you know the five"},{"startTime":535.0,"endTime":541.57,"body":"seats to lending and we're shocked ahead"},{"startTime":537.01,"endTime":543.13,"body":"I guess three out of five or the five Cs"},{"startTime":541.57,"endTime":547.12,"body":"of credit"},{"startTime":543.13,"endTime":549.55,"body":"so can you that was harder training for"},{"startTime":547.12,"endTime":552.4,"body":"the business owners and myself what are"},{"startTime":549.55,"endTime":555.7,"body":"the the five season of credit what we're"},{"startTime":552.4,"endTime":557.95,"body":"always looking for our threats to and to"},{"startTime":555.7,"endTime":559.6,"body":"how we get repaid so we are looking at"},{"startTime":557.95,"endTime":562.75,"body":"sources of repayment for the loans that"},{"startTime":559.6,"endTime":564.76,"body":"we make and and some of the determining"},{"startTime":562.75,"endTime":566.58,"body":"factors of that you sort of like you"},{"startTime":564.76,"endTime":569.05,"body":"said go back to the five Cs of credit"},{"startTime":566.58,"endTime":571.41,"body":"character is a big one that's why I"},{"startTime":569.05,"endTime":573.64,"body":"really like keys process and that"},{"startTime":571.41,"endTime":575.5,"body":"getting loans approved and whatnot we"},{"startTime":573.64,"endTime":577.51,"body":"like to meet management teams I've met a"},{"startTime":575.5,"endTime":580.0,"body":"ton of management teams we've been on a"},{"startTime":577.51,"endTime":582.34,"body":"bunch of plant tours together you know I"},{"startTime":580.0,"endTime":585.43,"body":"I always tell people I've warned hard"},{"startTime":582.34,"endTime":586.63,"body":"hats and goggles and lab coats and you"},{"startTime":585.43,"endTime":589.47,"body":"know I really like getting out and"},{"startTime":586.63,"endTime":592.66,"body":"seeing businesses and meeting people and"},{"startTime":589.47,"endTime":594.4,"body":"so character is a big one for us and"},{"startTime":592.66,"endTime":596.08,"body":"what we're trying to assess there too is"},{"startTime":594.4,"endTime":598.3,"body":"the strength of the management team it's"},{"startTime":596.08,"endTime":600.13,"body":"not just all about the owner but you"},{"startTime":598.3,"endTime":601.63,"body":"guys have passed the character test but"},{"startTime":600.13,"endTime":603.88,"body":"we need to know that the management team"},{"startTime":601.63,"endTime":605.2,"body":"can as well so it's not just a private"},{"startTime":603.88,"endTime":606.4,"body":"equity firm it's also the management"},{"startTime":605.2,"endTime":608.14,"body":"team that you're taking like that too"},{"startTime":606.4,"endTime":610.81,"body":"for sure for sure you know you try to"},{"startTime":608.14,"endTime":613.96,"body":"figure out their ability to navigate"},{"startTime":610.81,"endTime":616.3,"body":"tough situations how have they how has"},{"startTime":613.96,"endTime":619.24,"body":"their business abdun flowed how has it"},{"startTime":616.3,"endTime":621.13,"body":"grown and you know is there have been"},{"startTime":619.24,"endTime":623.35,"body":"any turmoil in the industry and how do"},{"startTime":621.13,"endTime":625.39,"body":"they how do they figure that out and how"},{"startTime":623.35,"endTime":628.03,"body":"do they you know keep the EBIT study"},{"startTime":625.39,"endTime":630.04,"body":"where it is in order to repay the debt"},{"startTime":628.03,"endTime":631.57,"body":"so that's you're trying to assess their"},{"startTime":630.04,"endTime":633.42,"body":"ability to navigate those waters"},{"startTime":631.57,"endTime":636.94,"body":"I want to interrupt the five seas for"},{"startTime":633.42,"endTime":639.22,"body":"another national question so as you look"},{"startTime":636.94,"endTime":640.96,"body":"at oftentimes there's a lot of business"},{"startTime":639.22,"endTime":643.81,"body":"owners that haven't had to put any debt"},{"startTime":640.96,"endTime":645.7,"body":"on their balance sheet so when you know"},{"startTime":643.81,"endTime":647.02,"body":"a private equity firm is coming in"},{"startTime":645.7,"endTime":649.38,"body":"obviously it's a leveraged"},{"startTime":647.02,"endTime":652.3,"body":"recapitalization we are using leverage"},{"startTime":649.38,"endTime":653.92,"body":"to help fund the transaction how do you"},{"startTime":652.3,"endTime":656.05,"body":"look at a business owner management team"},{"startTime":653.92,"endTime":658.7,"body":"that have never dealt with"},{"startTime":656.05,"endTime":661.04,"body":"that on their balance sheet prior um"},{"startTime":658.7,"endTime":663.65,"body":"well you I mean that's that's really not"},{"startTime":661.04,"endTime":665.93,"body":"that big of a deal you sort of want to"},{"startTime":663.65,"endTime":669.11,"body":"make sure that through the diligence"},{"startTime":665.93,"endTime":670.94,"body":"process they know what covenants are if"},{"startTime":669.11,"endTime":673.82,"body":"there's any additional reporting that"},{"startTime":670.94,"endTime":675.2,"body":"and and what's important to the bank but"},{"startTime":673.82,"endTime":677.51,"body":"as long as I mean what they should"},{"startTime":675.2,"endTime":679.25,"body":"really be focused on is their ebit on"},{"startTime":677.51,"endTime":680.87,"body":"their performance I don't really want"},{"startTime":679.25,"endTime":682.91,"body":"them to be sort of worried about the"},{"startTime":680.87,"endTime":684.62,"body":"banking relationship if they perform"},{"startTime":682.91,"endTime":686.45,"body":"everything else will fall into place"},{"startTime":684.62,"endTime":689.51,"body":"because that's what we underwrite to we"},{"startTime":686.45,"endTime":691.7,"body":"underwrite to their EBIT on their"},{"startTime":689.51,"endTime":694.4,"body":"financial performance the rest of it"},{"startTime":691.7,"endTime":696.44,"body":"should be which should be fine what they"},{"startTime":694.4,"endTime":698.6,"body":"should take into consideration the only"},{"startTime":696.44,"endTime":699.89,"body":"thing that that will sort of trip that"},{"startTime":698.6,"endTime":701.9,"body":"up maybe a little bit is on the"},{"startTime":699.89,"endTime":704.21,"body":"liquidity side and and if there's um"},{"startTime":701.9,"endTime":706.22,"body":"there's absent flows in their working"},{"startTime":704.21,"endTime":707.66,"body":"capital if it's a seasonal business you"},{"startTime":706.22,"endTime":709.67,"body":"know making sure if they're when they're"},{"startTime":707.66,"endTime":716.06,"body":"in and out of their line of credit and"},{"startTime":709.67,"endTime":718.61,"body":"as appropriate and capital needs we know"},{"startTime":716.06,"endTime":722.96,"body":"you're good so we talked about character"},{"startTime":718.61,"endTime":724.82,"body":"we talked about capacity or cash flow"},{"startTime":722.96,"endTime":727.43,"body":"and that's just sort of what we talked"},{"startTime":724.82,"endTime":729.95,"body":"about is the capacity of the business to"},{"startTime":727.43,"endTime":732.38,"body":"repay the debt and that is all about the"},{"startTime":729.95,"endTime":735.2,"body":"financial performance and the EBIT ah so"},{"startTime":732.38,"endTime":738.95,"body":"you know the business and we don't a lot"},{"startTime":735.2,"endTime":741.35,"body":"of businesses they grow and then they've"},{"startTime":738.95,"endTime":743.42,"body":"hit a level of performance in EBIT uh"},{"startTime":741.35,"endTime":744.71,"body":"and they decide that that's a good time"},{"startTime":743.42,"endTime":746.69,"body":"to sell because they've grown their"},{"startTime":744.71,"endTime":748.22,"body":"business and the multiple of a bigger"},{"startTime":746.69,"endTime":750.71,"body":"number say multiple of a bigger number"},{"startTime":748.22,"endTime":752.33,"body":"obviously that's them more more cash but"},{"startTime":750.71,"endTime":754.49,"body":"what we really try to get into is well"},{"startTime":752.33,"endTime":755.9,"body":"what's the sustainability of that you"},{"startTime":754.49,"endTime":759.89,"body":"know is it a hockey stick was it a"},{"startTime":755.9,"endTime":763.18,"body":"one-time event and it can they repeat"},{"startTime":759.89,"endTime":765.53,"body":"that performance on a consistent basis"},{"startTime":763.18,"endTime":767.54,"body":"condition is another one and that's some"},{"startTime":765.53,"endTime":769.76,"body":"time that comes a lot from outside"},{"startTime":767.54,"endTime":772.64,"body":"factors what's going on in the industry"},{"startTime":769.76,"endTime":775.19,"body":"how do they fit within that industry are"},{"startTime":772.64,"endTime":778.22,"body":"there you know laws and regulations that"},{"startTime":775.19,"endTime":782.57,"body":"sometimes help businesses that laws and"},{"startTime":778.22,"endTime":784.01,"body":"regs require businesses to you know buy"},{"startTime":782.57,"endTime":785.84,"body":"whatever the product is that that"},{"startTime":784.01,"endTime":788.07,"body":"company is selling you'll see that a lot"},{"startTime":785.84,"endTime":790.41,"body":"in like heavy trucking and all the"},{"startTime":788.07,"endTime":792.6,"body":"rules change and so that drives a lot of"},{"startTime":790.41,"endTime":797.04,"body":"business to get ahead of those certain"},{"startTime":792.6,"endTime":798.09,"body":"things like that but or conversely are"},{"startTime":797.04,"endTime":799.89,"body":"they facing"},{"startTime":798.09,"endTime":801.9,"body":"you know headwinds is there the Amazon"},{"startTime":799.89,"endTime":803.85,"body":"effect and a lot of you know consumer"},{"startTime":801.9,"endTime":807.15,"body":"discretionary right now is incredibly"},{"startTime":803.85,"endTime":810.96,"body":"stressed so you try to look at outside"},{"startTime":807.15,"endTime":813.17,"body":"factors as well collateral is another"},{"startTime":810.96,"endTime":816.0,"body":"one in that those are the assets pledged"},{"startTime":813.17,"endTime":818.99,"body":"against the loan so your receivables"},{"startTime":816.0,"endTime":821.79,"body":"inventory your senior lender has a first"},{"startTime":818.99,"endTime":823.61,"body":"first lien on those assets and so you"},{"startTime":821.79,"endTime":825.75,"body":"look at that as a source of repayment"},{"startTime":823.61,"endTime":828.72,"body":"generally speaking in newer kinds of"},{"startTime":825.75,"endTime":831.09,"body":"transactions we're not looking to the"},{"startTime":828.72,"endTime":834.12,"body":"collateral for a ton of repayment"},{"startTime":831.09,"endTime":836.67,"body":"because they're not asset heavy deals we"},{"startTime":834.12,"endTime":838.53,"body":"focus on the value of the company is not"},{"startTime":836.67,"endTime":840.51,"body":"just what's on the balance sheet there's"},{"startTime":838.53,"endTime":842.9,"body":"an enterprise value which is why we sort"},{"startTime":840.51,"endTime":850.68,"body":"of look at funded debt to EBIT"},{"startTime":842.9,"endTime":854.22,"body":"and then lastly is I lost my train of"},{"startTime":850.68,"endTime":856.53,"body":"thought so not lastly is is the equity"},{"startTime":854.22,"endTime":859.05,"body":"you put in I know it's not - see - it's"},{"startTime":856.53,"endTime":861.36,"body":"no it's not no my gosh I'm totally blank"},{"startTime":859.05,"endTime":863.16,"body":"Capital it's the capital that is equity"},{"startTime":861.36,"endTime":866.28,"body":"you put into the business so I'm seeing"},{"startTime":863.16,"endTime":868.02,"body":"capital so you you know the ownership of"},{"startTime":866.28,"endTime":869.46,"body":"the business what skin do they have in"},{"startTime":868.02,"endTime":872.52,"body":"the game and you want to make sure that"},{"startTime":869.46,"endTime":875.19,"body":"that the ownership team has has"},{"startTime":872.52,"endTime":877.11,"body":"something at risk as well yeah so it's"},{"startTime":875.19,"endTime":878.79,"body":"not too dissimilar from what we look at"},{"startTime":877.11,"endTime":880.77,"body":"you know we put the other potential"},{"startTime":878.79,"endTime":882.96,"body":"investment standard score and we look at"},{"startTime":880.77,"endTime":885.06,"body":"the macro micro environment we look at"},{"startTime":882.96,"endTime":886.86,"body":"the competitive advantage of a company"},{"startTime":885.06,"endTime":888.78,"body":"we look at the depth and strength of"},{"startTime":886.86,"endTime":891.24,"body":"their management team right we look at"},{"startTime":888.78,"endTime":893.22,"body":"our ability to add value and then we"},{"startTime":891.24,"endTime":894.57,"body":"look at the financial profile so you"},{"startTime":893.22,"endTime":897.45,"body":"know there's there's a lot of things in"},{"startTime":894.57,"endTime":899.73,"body":"common from what we look for - sure you"},{"startTime":897.45,"endTime":901.47,"body":"guys are the only I say the biggest"},{"startTime":899.73,"endTime":903.27,"body":"difference is that you guys are under"},{"startTime":901.47,"endTime":905.04,"body":"right into the growth case and I really"},{"startTime":903.27,"endTime":907.14,"body":"am just looking at the base case that's"},{"startTime":905.04,"endTime":909.0,"body":"all I need yeah you know you can show me"},{"startTime":907.14,"endTime":911.61,"body":"a bunch of projections that show a bunch"},{"startTime":909.0,"endTime":913.74,"body":"of growth and I will discount those and"},{"startTime":911.61,"endTime":916.08,"body":"say okay well all I really need them to"},{"startTime":913.74,"endTime":917.379,"body":"do is perform at the level right at the"},{"startTime":916.08,"endTime":919.749,"body":"level that they have"},{"startTime":917.379,"endTime":921.629,"body":"and you know banks generally look at"},{"startTime":919.749,"endTime":923.709,"body":"history as an indication of"},{"startTime":921.629,"endTime":927.069,"body":"forward-looking performance it doesn't"},{"startTime":923.709,"endTime":929.799,"body":"always match up but that we generally"},{"startTime":927.069,"endTime":934.509,"body":"because anybody can put something on but"},{"startTime":929.799,"endTime":936.579,"body":"until you actually hit it that's what"},{"startTime":934.509,"endTime":939.159,"body":"you know that's when it becomes real"},{"startTime":936.579,"endTime":943.239,"body":"yeah so that's a good transition into"},{"startTime":939.159,"endTime":945.849,"body":"debt levels so generally what are the"},{"startTime":943.239,"endTime":947.379,"body":"total debt levels that Key Bank"},{"startTime":945.849,"endTime":949.179,"body":"or senior lender might be comfortable"},{"startTime":947.379,"endTime":950.349,"body":"with both from a total debt perspective"},{"startTime":949.179,"endTime":952.359,"body":"and then from a senior lending"},{"startTime":950.349,"endTime":956.439,"body":"perspective as it relates to EBIT da"},{"startTime":952.359,"endTime":958.779,"body":"sure so generally speaking were less"},{"startTime":956.439,"endTime":961.869,"body":"than 3 by 4 shop and what that means is"},{"startTime":958.779,"endTime":965.919,"body":"that we focus on putting we require"},{"startTime":961.869,"endTime":967.839,"body":"really putting less than senior debt to"},{"startTime":965.919,"endTime":970.989,"body":"eat itself less than 3 times in total"},{"startTime":967.839,"endTime":973.449,"body":"less than 4 so 3 times would sort of be"},{"startTime":970.989,"endTime":975.399,"body":"our benchmark and we generally an small"},{"startTime":973.449,"endTime":977.049,"body":"some smaller businesses and size matters"},{"startTime":975.399,"endTime":979.239,"body":"in that space"},{"startTime":977.049,"endTime":982.569,"body":"on smaller businesses which is generally"},{"startTime":979.239,"endTime":984.489,"body":"what you guys do and small I'd say and"},{"startTime":982.569,"endTime":986.649,"body":"by our definition is less than 20"},{"startTime":984.489,"endTime":988.419,"body":"million dollars in EBIT and there is a"},{"startTime":986.649,"endTime":992.199,"body":"reason for that"},{"startTime":988.419,"endTime":994.149,"body":"we try to stay you know 275 250 so that"},{"startTime":992.199,"endTime":998.079,"body":"we try to give ourselves some room under"},{"startTime":994.149,"endTime":1000.659,"body":"that 3 that 3 handle threshold and then"},{"startTime":998.079,"endTime":1003.689,"body":"you can put a layer generally of of sub"},{"startTime":1000.659,"endTime":1006.809,"body":"debt on top of that and the reason that"},{"startTime":1003.689,"endTime":1008.609,"body":"that $20,000,000 EBIT on number is"},{"startTime":1006.809,"endTime":1010.47,"body":"significant because generally speaking"},{"startTime":1008.609,"endTime":1012.869,"body":"bigger companies have access to the"},{"startTime":1010.47,"endTime":1015.479,"body":"capital markets that smaller businesses"},{"startTime":1012.869,"endTime":1019.019,"body":"just do not and so those structures just"},{"startTime":1015.479,"endTime":1021.419,"body":"don't fit in that smaller space you know"},{"startTime":1019.019,"endTime":1024.179,"body":"the percentage is you know 10% of a 20"},{"startTime":1021.419,"endTime":1025.589,"body":"million dollar business obviously is you"},{"startTime":1024.179,"endTime":1027.72,"body":"know 2 million dollars that's a"},{"startTime":1025.589,"endTime":1029.159,"body":"significant in terms of dollars if it's"},{"startTime":1027.72,"endTime":1030.509,"body":"only two and a half million dollars"},{"startTime":1029.159,"endTime":1032.73,"body":"that's 250 grand"},{"startTime":1030.509,"endTime":1035.039,"body":"you can drop 250 grand pretty quickly"},{"startTime":1032.73,"endTime":1037.169,"body":"and that's already 10% yeah so that's"},{"startTime":1035.039,"endTime":1038.85,"body":"that's another reason that the the math"},{"startTime":1037.169,"endTime":1040.799,"body":"sort of gets a little bit different when"},{"startTime":1038.85,"endTime":1044.179,"body":"the numbers are smaller because the"},{"startTime":1040.799,"endTime":1046.829,"body":"percentages are very small changes that"},{"startTime":1044.179,"endTime":1048.72,"body":"businesses can see very often and it's a"},{"startTime":1046.829,"endTime":1052.77,"body":"function of risk right"},{"startTime":1048.72,"endTime":1055.14,"body":"they write from a rates standpoint you"},{"startTime":1052.77,"endTime":1059.19,"body":"know where our race a what you've seen"},{"startTime":1055.14,"endTime":1061.86,"body":"your lenders generally charge generally"},{"startTime":1059.19,"endTime":1065.4,"body":"I mean it's really relationship pricing"},{"startTime":1061.86,"endTime":1069.0,"body":"and so we basically look at yeah of"},{"startTime":1065.4,"endTime":1071.429,"body":"course we we basically we basically look"},{"startTime":1069.0,"endTime":1073.11,"body":"at the entire relationship and what"},{"startTime":1071.429,"endTime":1075.69,"body":"products and services are going to be"},{"startTime":1073.11,"endTime":1077.19,"body":"used there's a lot of factors that can"},{"startTime":1075.69,"endTime":1079.5,"body":"that contribute to that are there any"},{"startTime":1077.19,"endTime":1081.9,"body":"deposits that that are will remain on"},{"startTime":1079.5,"endTime":1083.7,"body":"the balance sheet are there using"},{"startTime":1081.9,"endTime":1086.01,"body":"treasury services which we would require"},{"startTime":1083.7,"endTime":1087.6,"body":"and any deal we would be the only lender"},{"startTime":1086.01,"endTime":1089.46,"body":"so we would require all that are they"},{"startTime":1087.6,"endTime":1092.13,"body":"going to do fix their rate using an"},{"startTime":1089.46,"endTime":1094.02,"body":"interest rate swap you know we factor"},{"startTime":1092.13,"endTime":1096.72,"body":"all of that in and honestly in our"},{"startTime":1094.02,"endTime":1099.63,"body":"relationship we factor the whole MCN"},{"startTime":1096.72,"endTime":1101.789,"body":"relationship into into the deal you know"},{"startTime":1099.63,"endTime":1104.64,"body":"because we we've been we've had such a"},{"startTime":1101.789,"endTime":1106.77,"body":"good long-standing relationship that we"},{"startTime":1104.64,"endTime":1108.179,"body":"take into that we take into account that"},{"startTime":1106.77,"endTime":1111.23,"body":"whole relationship that we have with"},{"startTime":1108.179,"endTime":1114.21,"body":"your team into our pricing models great"},{"startTime":1111.23,"endTime":1116.789,"body":"so what can you explain for the business"},{"startTime":1114.21,"endTime":1119.01,"body":"owners what debt covenants are and which"},{"startTime":1116.789,"endTime":1122.7,"body":"ones are the most important sure to you"},{"startTime":1119.01,"endTime":1126.36,"body":"sure we generally try to keep it we keep"},{"startTime":1122.7,"endTime":1128.669,"body":"trying to keep it simple so I always say"},{"startTime":1126.36,"endTime":1130.59,"body":"to people you know what really matters"},{"startTime":1128.669,"endTime":1133.26,"body":"you know what are we trying to solve for"},{"startTime":1130.59,"endTime":1136.559,"body":"here and cash is king cash flow is king"},{"startTime":1133.26,"endTime":1138.21,"body":"and that is a number one most important"},{"startTime":1136.559,"endTime":1140.61,"body":"so you're operating cash flow or your"},{"startTime":1138.21,"endTime":1142.71,"body":"fixed charge coverage ratio definitions"},{"startTime":1140.61,"endTime":1145.409,"body":"are sort of interchangeable that's the"},{"startTime":1142.71,"endTime":1148.32,"body":"most important covenant to us leverage"},{"startTime":1145.409,"endTime":1150.69,"body":"is important but but cash flow is is our"},{"startTime":1148.32,"endTime":1152.1,"body":"number one covenant in there and that"},{"startTime":1150.69,"endTime":1154.34,"body":"what that means is you're taking the"},{"startTime":1152.1,"endTime":1156.9,"body":"operating cash flows of the business"},{"startTime":1154.34,"endTime":1159.48,"body":"divided by the fixed charges which would"},{"startTime":1156.9,"endTime":1161.7,"body":"be principal interest distributions"},{"startTime":1159.48,"endTime":1164.309,"body":"capex and taxes those are the five"},{"startTime":1161.7,"endTime":1166.5,"body":"generally that go into the denominator"},{"startTime":1164.309,"endTime":1167.73,"body":"and sometimes it's a deed up from the"},{"startTime":1166.5,"endTime":1169.44,"body":"new you know I don't even get into all"},{"startTime":1167.73,"endTime":1173.159,"body":"of the definitions and whatnot there"},{"startTime":1169.44,"endTime":1174.659,"body":"there can be various definitions but it"},{"startTime":1173.159,"endTime":1176.669,"body":"really shows that the business is"},{"startTime":1174.659,"endTime":1178.77,"body":"performing at a level that can repay the"},{"startTime":1176.669,"endTime":1180.899,"body":"debt and what generally is the covenant"},{"startTime":1178.77,"endTime":1182.13,"body":"there then in a fixed charge it falls"},{"startTime":1180.899,"endTime":1185.19,"body":"anywhere between"},{"startTime":1182.13,"endTime":1187.809,"body":"110 to 120 depending on your definition"},{"startTime":1185.19,"endTime":1190.059,"body":"that's generally the range that we would"},{"startTime":1187.809,"endTime":1193.299,"body":"like to see and if there's a covenant"},{"startTime":1190.059,"endTime":1194.65,"body":"trip we the reason for the covenant is"},{"startTime":1193.299,"endTime":1196.39,"body":"to give us a signal that there might be"},{"startTime":1194.65,"endTime":1198.549,"body":"a problem to bring us all back to the"},{"startTime":1196.39,"endTime":1200.32,"body":"table it doesn't mean the end of the"},{"startTime":1198.549,"endTime":1202.03,"body":"world and you're gonna throw us the keys"},{"startTime":1200.32,"endTime":1203.86,"body":"and we're throwing you out of the bank"},{"startTime":1202.03,"endTime":1206.53,"body":"that's just definitely not what it's"},{"startTime":1203.86,"endTime":1208.63,"body":"meant to do it's meant to re-engage the"},{"startTime":1206.53,"endTime":1210.88,"body":"conversation about okay you had a"},{"startTime":1208.63,"endTime":1213.549,"body":"misstep or maybe you had a one-time"},{"startTime":1210.88,"endTime":1215.41,"body":"activity you built you had a huge piece"},{"startTime":1213.549,"endTime":1217.39,"body":"of machinery that you wanted to pay out"},{"startTime":1215.41,"endTime":1218.89,"body":"of cash flow because you didn't really"},{"startTime":1217.39,"endTime":1221.95,"body":"need to borrow any money on the work"},{"startTime":1218.89,"endTime":1223.99,"body":"yeah so you know that through you that's"},{"startTime":1221.95,"endTime":1225.91,"body":"who you are for that year how I describe"},{"startTime":1223.99,"endTime":1227.38,"body":"that to people is that maybe you had"},{"startTime":1225.91,"endTime":1229.929,"body":"some cash on the balance sheet that you"},{"startTime":1227.38,"endTime":1231.94,"body":"had been saving over numerous years and"},{"startTime":1229.929,"endTime":1233.83,"body":"so you really wanted to use that cash"},{"startTime":1231.94,"endTime":1237.4,"body":"you didn't pay for it out of operations"},{"startTime":1233.83,"endTime":1237.85,"body":"all in the same year I I sort of look at"},{"startTime":1237.4,"endTime":1239.38,"body":"that"},{"startTime":1237.85,"endTime":1241.87,"body":"like when you go to buy a home you"},{"startTime":1239.38,"endTime":1244.63,"body":"didn't you didn't earn your downpayment"},{"startTime":1241.87,"endTime":1246.19,"body":"all in one year right you know so maybe"},{"startTime":1244.63,"endTime":1248.47,"body":"you saved some money or you know maybe"},{"startTime":1246.19,"endTime":1251.5,"body":"you you you funded that capital"},{"startTime":1248.47,"endTime":1253.059,"body":"expenditure through another loan so you"},{"startTime":1251.5,"endTime":1254.14,"body":"know you would borrow to do that and"},{"startTime":1253.059,"endTime":1256.0,"body":"then you'd add to your principal"},{"startTime":1254.14,"endTime":1259.36,"body":"payments for that that's a great example"},{"startTime":1256.0,"endTime":1260.65,"body":"yeah and we also view we view growth"},{"startTime":1259.36,"endTime":1263.23,"body":"catbacks very differently than"},{"startTime":1260.65,"endTime":1266.08,"body":"maintenance capex but what we're trying"},{"startTime":1263.23,"endTime":1268.12,"body":"to look at is that the maintenance capex"},{"startTime":1266.08,"endTime":1270.46,"body":"in the in the fixed charge is what do"},{"startTime":1268.12,"endTime":1272.799,"body":"you need to spend year in and year out"},{"startTime":1270.46,"endTime":1274.69,"body":"in order for to produce the same EBIT"},{"startTime":1272.799,"endTime":1275.89,"body":"job that you did you know you're clearly"},{"startTime":1274.69,"endTime":1278.35,"body":"if it's growth"},{"startTime":1275.89,"endTime":1280.54,"body":"maybe you grow grew like I heard prior"},{"startTime":1278.35,"endTime":1281.95,"body":"you were roux in to a new building yeah"},{"startTime":1280.54,"endTime":1283.57,"body":"well you're not gonna buy a new building"},{"startTime":1281.95,"endTime":1285.58,"body":"every year that's definitely a growth"},{"startTime":1283.57,"endTime":1287.919,"body":"move that you have to do every so often"},{"startTime":1285.58,"endTime":1291.13,"body":"but generally speaking you that's not an"},{"startTime":1287.919,"endTime":1293.26,"body":"every year activity so but but anyhow"},{"startTime":1291.13,"endTime":1295.54,"body":"does going back to fixed charge coverage"},{"startTime":1293.26,"endTime":1297.76,"body":"that just shows the ability to repay and"},{"startTime":1295.54,"endTime":1301.24,"body":"in the banking world that's a that's big"},{"startTime":1297.76,"endTime":1303.04,"body":"in the risk rating system which it just"},{"startTime":1301.24,"endTime":1305.52,"body":"shows the performance of a loan and that"},{"startTime":1303.04,"endTime":1308.08,"body":"the better the risk rating is for us"},{"startTime":1305.52,"endTime":1310.27,"body":"means we don't bank has to reserve less"},{"startTime":1308.08,"endTime":1312.91,"body":"capital against that loan and so when it"},{"startTime":1310.27,"endTime":1313.42,"body":"falls below that one especially at a one"},{"startTime":1312.91,"endTime":1315.28,"body":"time"},{"startTime":1313.42,"endTime":1318.04,"body":"we have to reserve a lot more capital"},{"startTime":1315.28,"endTime":1319.63,"body":"against that loan and so that's why we"},{"startTime":1318.04,"endTime":1321.82,"body":"proceed with well it's perceived to be"},{"startTime":1319.63,"endTime":1324.22,"body":"riskier in that scenario and that's why"},{"startTime":1321.82,"endTime":1326.77,"body":"I cost the bank a lot more money so and"},{"startTime":1324.22,"endTime":1328.63,"body":"then on the leverage side we generally"},{"startTime":1326.77,"endTime":1330.67,"body":"focused on the leverage covenants in"},{"startTime":1328.63,"endTime":1333.4,"body":"terms of funded debt to EBIT a like we"},{"startTime":1330.67,"endTime":1335.2,"body":"just talked about and so we'll start we"},{"startTime":1333.4,"endTime":1337.45,"body":"like to see those closing numbers less"},{"startTime":1335.2,"endTime":1338.71,"body":"than three by four but we don't under"},{"startTime":1337.45,"endTime":1341.59,"body":"right right to that those numbers"},{"startTime":1338.71,"endTime":1343.03,"body":"because we know that you've got a you"},{"startTime":1341.59,"endTime":1344.68,"body":"got to allow some cushion and right"},{"startTime":1343.03,"endTime":1347.92,"body":"we're not looking for defaults believe"},{"startTime":1344.68,"endTime":1349.57,"body":"me I'm not looking for a default so we"},{"startTime":1347.92,"endTime":1351.91,"body":"give some some cushion and we look at"},{"startTime":1349.57,"endTime":1353.86,"body":"the plan and then we sort of we set"},{"startTime":1351.91,"endTime":1356.29,"body":"benchmarks to try to see that leverage"},{"startTime":1353.86,"endTime":1359.05,"body":"come down over the years so when you're"},{"startTime":1356.29,"endTime":1361.93,"body":"looking at a an operating plan you know"},{"startTime":1359.05,"endTime":1364.6,"body":"during the the diligence side how how"},{"startTime":1361.93,"endTime":1367.44,"body":"much are you discounting 20 percent 20"},{"startTime":1364.6,"endTime":1371.71,"body":"percent Thanks that's that's basic"},{"startTime":1367.44,"endTime":1374.29,"body":"depends on how lofty the plan is but as"},{"startTime":1371.71,"endTime":1377.11,"body":"a goal I'll take the plan that you give"},{"startTime":1374.29,"endTime":1379.06,"body":"us the owners or I'm seeing whomever has"},{"startTime":1377.11,"endTime":1381.94,"body":"provided and will try to give you at"},{"startTime":1379.06,"endTime":1383.799,"body":"least a 20% to the Covenant"},{"startTime":1381.94,"endTime":1385.149,"body":"yeah well Kelly thank you so much for"},{"startTime":1383.799,"endTime":1387.73,"body":"taking the time I really enjoyed the"},{"startTime":1385.149,"endTime":1389.32,"body":"business owners would get a lot of thank"},{"startTime":1387.73,"endTime":1390.85,"body":"you yeah no thank you I appreciate it"},{"startTime":1389.32,"endTime":1392.32,"body":"thank you for taking the time to watch"},{"startTime":1390.85,"endTime":1394.21,"body":"another episode of well capitalized"},{"startTime":1392.32,"endTime":1395.59,"body":"please subscribe to our channel below if"},{"startTime":1394.21,"endTime":1397.269,"body":"you have any additional questions please"},{"startTime":1395.59,"endTime":1399.75,"body":"leave them in the comment section"},{"startTime":1397.269,"endTime":1399.75,"body":"thank you"}]}