[00:00:04] Speaker A: Hello and welcome, everyone. I'm Peter Lehrman, and this is Masters in Small Business M A. This show is an ongoing exploration into the vast and undercovered world of small business M A, where we interview both the proven and the emerging owners, operators, investors, and advisors whose strategies and methods for transaction success have been put to the test. The show aims to us the nuanced intricacies, the key ingredients, and the important factors that can improve your decision making in your own journey in the world of small business M A. This podcast is produced by Axial, an online platform that makes it easier for business owners and their M A advisors to find, research, and privately connect with a diverse mix of professional buyers of small businesses. In addition to learning more about Axial, you can find this podcast show notes, edited transcripts, and many other related resources, all for
[email protected].
Peter Laraman is the CEO of Axial. All opinions expressed by Peter and podcast guests do not reflect the views or opinions of Axial. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Podcast guests may have ongoing client relationships with Axial.
[00:01:21] Speaker B: Lance, thank you so much. I know it's Q four for you guys. It's go time in your business. Thank you for making time to hop on masters in small business M and a sure thing.
[00:01:31] Speaker C: Thanks, Peter, for having me.
[00:01:32] Speaker B: So I want to dive right in. I know you've got about 60 minutes to give us, and we spent a bunch of time getting ramped up offline just because there's so much to cover. Let's just quickly start with Nassau Candy and just the brief origin story. It goes back to, well, very briefly go back to 1918, but then let's spend most of our time covering what happened in 1984 with your dad. We'll start there.
[00:01:53] Speaker C: Sure. And again, Peter, thank you for having me. Peter, you and I know each other from the private equity business, just from the building business, and it's an honor to be on this podcast with you Today. So 1918 was the founding of Nassau county. So we're over 100 years old. Company was founded as a supplier to the ice cream fountains in New York City. So if you think about those classic ice cream fountains, you might see if you've watched Charlie and the Chocolate factory and the guy pulls the candy from behind the counter, that was how NASA Candy was found. And we were the supplier of everything but the ice cream to those stores. And so, as you would know, that business had grown a bunch in 1918 to the period, and then it sort of chopped a little bit by the early 1980s, which was a time at which my dad actually acquired the initial business. My dad, by background, grew up the son of an entrepreneur, and it was actually in the mold making business of vinyl dolls. And my dad always wanted to own a business. And so he came across Nassau Candy in the early eighty s. And the reason he bought the business was a little bit of his own experience and a little bit of other reasons. But in his own experience, his father had a business that was a mold maker for vinyl dolls, and that business had been based in Brooklyn. A lot of the mold making was based in Brooklyn, as well as the toy production. That business had been offshored. And so my dad knew the type of company he wanted to acquire was a business that was not as offshoreable, so to speak. And so he liked the idea of being in the distribution business, and particularly candy. Candy is a great business because people eat candy products where they're happy or they're sad. And in tough economic climates, people eat candy as a comfort food. It's kind of an inexpensive pick me up, and in better economic climates, you'll trade up for the luxury chocolate. And so candy has always been that type of business. So my dad saw that, and that was how he got into the business in the early 1980s.
[00:03:48] Speaker B: Just to be clear, when he bought it, I want to actually ask two questions here. The first is, when he bought it, was it purely a distributor, or had it begun to develop some of its own specialty manufacturing capability?
[00:03:58] Speaker C: No, in the early 1980s, it was purely a distributor. Actually, the business that he bought was a candy and tobacco jobber that sold to local businesses on Long island. So for those of you who are in the distribution business, listening, distribution business, particularly specialty distribution businesses, are fundamentally distribution business, which has a local salesperson with a local distributor and a local relationship. That was the business he bought. It was a local. It was called Nassau Candy because we were headquartered in Nassau County, Long island, selling to local businesses. And the business mix itself, or the product mix itself, was candy and tobacco. Roughly 50% candy, 50% tobacco, and five associates. So nothing fancy. My dad had a small retail storefront, a station wagon, two legs, and some gas, and he decided that would be the backbone of the company we built.
[00:04:50] Speaker B: So 20 years later, you graduate from Penn 2000 and 420 years after your dad buys the business. You spend roughly five years in anything but the chocolate business. Leverage finance, I believe, at Lehman Brothers, and then a few years at two different private equity firms, and you decide to join Nassau Candy in 2009. What led you to make that choice? How did you make the decision to walk away from Wall street and all of its allure and head into the chocolate business with your dad. And at that point, clearly far more than five associates.
[00:05:27] Speaker C: Yeah, no, it's a great question. So just a little bit on me. So I left the graduate college 2004, as you said, I sort of joined the halcyon days of the investment banking leverage finance business. It was super fun, and we're super busy doing a lot of deals in the 2004 2006 period. A lot of leverage bias, a lot of high yield offerings, et cetera. And it was great. I mean, I learned a ton and worked with amazing people. And then after that, I left Lehman Brothers and joined Wellspring. When I joined Wellspring, I principally focused, as you mentioned, in the food consumer businesses. On the food side, I was fortunate to be super active with a portfolio company of ours called Vistar Corporation, which had been a carve out we did from international Multi foods, which became VSA, and then it became Vistar, and ultimately morphed into Performance Food Group, which is the third largest broadline food service distributor in North America. I was sort of involved in that business, very hands on over my time at Wellspring, and I loved it. So I went from a couple years at Wellspring, and then after that worked, I joined another private equity fund. To your point, Peter, in a quote, unquote, post MBA position. So the private equity business, typically there's puree MBA, and they expect folks to maybe go back to business school, and then after that, potentially return to those P funds. I was fortunate to get an offer to join in a post MBA position, meaning that I was able to continue, even though I had to not go back to my MBA, continue on this trajectory. Well, anyway, 2009 rolls around, 2008, 2009 rolls around, and as we all know, Lehman Bear, et cetera, go down. And I'm a deal guy, and I'm an energy guy, and I thrive on energy and doing stuff. 2004 to 2006, amazing period in the leverage dance business.
Period in the private equity business. The noise just stopped. The movie stopped. And when the movie stopped, I didn't really sit still so well. So I was talking to Dexter Payne, who I was close with, I regarded as a mentor he's still close with, and I had worked with him for a year and a half or so, and we weren't doing any deals. And we were, to take it from Dexter's perspective, we had a 2009, we had a portfolio that we were working through, a bunch of stuff. Unfortunately, the fund has done exceptionally well since then. But we were working through a bunch of stuff, and we weren't doing any deals, and I'm a deal guy, high energy, et cetera. And on the flip side, the business that my dad and uncle had built, my uncle joined the company in 1986. The business that they had built, or 85 ratios that they had built, was doing very well. So we had a candy business which distributed specialty candy. So from the initial candy tobacco job or business, Nassau Candy evolved into a supplier of specialty candy into many, many stores. And the gourmet foods business, another business we had acquired over time, we were a supplier of specialty food products to specialty outlets. And then in the manufacturing business, we were supplying mass retail. So all of those businesses were trending positively in eight, nine. The reason that was, or is, is because in tough economic climates, like we talked about, people look at candy as a comfort food. In the gourmet foods business, rather than dining away from home, folks were dining at home. So rather than spending, let's say, if you looked at, I don't know, the comps around people like outback or chili's or whomever, the casual dining restaurants in, like, the five to seven period where they're doing exceptionally well, you saw that market come off in that eight post Lehman period, because the family dining people who were the families, rather than spending the cost of casual dining restaurant, say, $100, to feed that family of four, they instead were at home. They were cooking. They're buying a good quality pasta, like a dicheko pasta with a rayos pasta quality pasta sauce, and then with a little bit of work feeding their family for 25 or $30. Right. And so what you saw in our gourmet foods business was super strong comp trends, frankly. Exactly. Fortunately, what you've seen in the past couple of years, as well as people had pulled back in 2020, period, less so because of economic reasons, more so because of health reasons, but same sort of thing. People dining at home, super strong in tougher economic periods. And so in 2009, we have this business, family business, that's doing well. I had my private equity business. I was at. We weren't doing deals. We're working more in the portfolio. And I guess it's 2009, and I'm sitting with Dexter Payne, who I was working very closely with. We were working on actually a lot of stuff together, including, I was sort of his junior guy on our LP, limited partner communications during this period. And so he and I got very close sort of drafting the documents, et cetera. And I'm sitting with him one day, and I'm saying, dexter, I'm really struggling right now. And he said, why? And I said, because our business is doing really well. My family business, the private equity business, I'm not sure kind of where this is all going, and I'm not really sure what this all means for me as a young professional. And we were talking, we kept talking. Anyway, the end of the conversation, Dexter goes to me, Lance, I have one question for you. And Dexter has an incredibly incisive mind, and he kind of can cut through the heart of an issue. And he says to me, lance, and this is 2009, so put in perspective, I was 27 years old. He goes, Lance, in ten years time. So when you're 37 or 40 or whatever, in ten years time, do you see yourself sitting in my seat, so to speak, proverbially, as a private equity partner or whatever, or do you see yourself sitting in your dad's seat as an entrepreneur running a business? And I said, dash, to be honest with you, I don't know. And he said, well, you got to find out then. And it was kind of with the blessing of somebody who I had such amazing respect for, but I was thinking about what to do with my career that I went ahead and did it. And it's definitely been the right decision for me and it's been the right decision for our family.
[00:10:59] Speaker B: So when he was saying, you got to find out, what he was basically saying was, you've spent five or six years in private equity and in the deal world, and by saying, you got to find out, he was like, you got to go and spend some time on the other side of the table.
[00:11:13] Speaker C: Yeah. In order to be able to really know. I mean, he was a real mentor, and I really believe this. He really wanted what was best for me as a professional, as a person, and he encouraged me to go on the path to learn about what it was I love to do. And so now, twelve years later, I think the answer is, I love doing both. Right? Like, I'm a deal guy. I love growing and building businesses through m and a. I love working with people to create businesses, but I also love the idea of investing money and stuff. So I think I've sort of learned that the answer was both, which is probably an answer I wasn't prepared to give in 2009.
[00:11:49] Speaker B: So, Lance, Nassau today, Nassau Candy today is a national scale specialty manufacturer, national scale specialty distributor of chocolate, gourmet foods, promotional products. You have outdoor wear and apparel. What it is today is definitely not what it was in 1984, and it's definitely not what it was in 2009, when you joined. I think one of the really interesting things to govern the conversation from here that I think will be very interesting to a lot of business builders is to hear about the last ten to 1310 to 15 years here, where you've been at the helm alongside, I'm sure, your dad and lots and lots of associates and employees and colleagues and key team members, and talk a little bit about how the business has developed from being this regional specialty distributor initially, to then being a regional specialty niche manufacturer and distributor, to now being national scale across those. And clearly, part of what you've said is true in terms of, like, loving the deal business and loving the business building process as well. That seems to be reflected in what NASA has. And so your energy for both seems to have manifested in what NASA is today, where it's been a combination of over ten acquisitions now, but also a lot of organic growth as well. So maybe the way to get into it a little bit, and one of the things I'm also very interested in covering is just sort of like how you guys think about focus and how you think entrepreneurs should think about focus. Ambitious entrepreneurs who want to grow a family business. How do you not get unfocused as you make acquisitions? So there's lots to cover here. I'd love to just start. It was very shortly after you arrived in the business and walked away from private equity and I'm sure shook Dexter's hand and said, all right, off I go. That you guys bought a business that I think became one of the key extensions of the original NASA candy business, which is sort of how you got started with NC Custom. Why don't we just dive into that initial acquisition? I think that was made either in 2009, 2010. Let's just talk about that. What was that business?
Why did you guys make that acquisition and just talk through the story of it at any level of detail that you remember, obviously, over ten years ago now.
[00:13:56] Speaker C: Yeah, of course. One little thing I want to touch on before we get into that is this has been a team game. So my dad is our chairman and CEO. My uncle is our company president. He and my dad have been business partners since 1985. So one of the really important things to know about our company, Peter, is that the two of them have been friends in sleepweight camp. So they are kind of like the backbone. They're like the backbone of the whole place. And then my brothers, I'm one of four boys, and all of us, I'm the oldest of four boys. Each one of us works in the business overseeing a different discipline. So I run our customization business. My brother Garrett runs our manufacturing business. My brother Travis runs our distribution business, and my brother Spencer runs our Gourmet foods business. So, honestly, we're best friends. And I know it sounds cheesy, but it's true. And the trust we have amongst us kind of is the backbone of all of this. Right? That's like the key. So I'd be remiss if I only talked about myself. It's not really my style, and it's not who we are. So I wanted to step back for a second. The second thing I want to step back on is we talk about the NC Custom business and the growth of the business. There have really been, we think about ourselves in four businesses. We have our specialty candy Distribution business. We have our gourmet Foods distribution business, and personal care business. We have our mass market manufacturing business, and now we have our customization business. Each one of those verticals has gone through organic growth and M A over this period that have substantially grown each one of those businesses. So there's been a strategy around each one of them, which would take us probably three more podcasts to get through, which I'd be happy to do.
[00:15:38] Speaker B: Let's do that.
[00:15:40] Speaker C: But I wanted to give you that 10,000 foot perspective.
[00:15:43] Speaker B: Yeah, no, that's great.
[00:15:44] Speaker C: In terms of our customization business. So it's the year 2010, and we're sort of saying, hey, we're generating some cash in our operating business and our candy and gourmet foods business.
What are the interesting things that we can look at? And my dad taught me a long time ago that in business, especially in small businesses, that we're acquiring, and it sounds like that's sort of the focus for a lot of entrepreneurs like us. The personality of a company comes from the leadership of the company. And you need to spend a ton of time getting to know the person you're going to be bringing into your business, because ultimately, and this is something my dad taught me, and it's kind of been the backbone of NASA Candy as well. In addition to the family situation, is if you find partners, make sure they're the right partners and really get to know those people, because you're going to be spending a ton of time with them. Whether it's good stuff, less good stuff that goes on in business, you guys are in this together. And so in 2010, we decided we were going to invest money outside of the business. We looked at a lot of different business, a lot of different categories. The reason we selected the promotional products business was really for, there were economic reasons and then there were personal reasons. On the personal reason side, we met a lot of people in the promotional products and customization businesses. We landed on a gentleman by the name of David Miller, who has been our business partner for the last 1213 years. And what we loved about David was he was a hard worker. He has a tremendous sort of business culture, but the ethics were top notch and we knew that together we can grow and build something because the connection was there. We kind of got it. We got on the same page when I was in the private equity business.
This is something that we spent time on, but not the amount of time we spend on now. At Nassau Candy, we spent a lot of time getting to know the people who we might be doing a deal with. So it's probably the most important part of our diligence. In addition to the numbers and other stuff check out, we spent a ton of time getting to know you because ultimately we're going to be business partners and we're going to do it together.
[00:17:52] Speaker B: How do you do that? How do you spend that time together? And is that prior to being sort of under letter of intent to buy a business or is that.
[00:17:59] Speaker C: Yes, definitely prior. So it's typically we'll meet a business, we'll get to know them a little bit, frankly. We'll invite them to our place or we'll go to their place of business and we'll talk and we'll get to know them as people. Maybe we'll go for dinner or do something casual. We really want to get to know you. We want to get to know you. And we don't talk about numbers. It could be just, hey, what do you like doing? What's your passion? We always ask the entrepreneur, what's your passion? And it tells you a lot about people because our job in M. A is to free, at least the way we see it, is either to free entrepreneurs up to focus on their passion or to give them additional capital to sort of expand that passion. Right? So that's kind of what we view. So we view our role in some ways as helping free that entrepreneur up to focus on his, their passion. So first one is that, and the second thing we try to do is we try to identify where by coming together, one plus one can equal way more than 2345. And a lot of that happens through those early days dialogues. But also what we're screening for, and I assume they're screening for us the same way, is the proverbial airplane test, which is like airport test. It's like, hey, if I'm stuck in an airport with this guy or gal, how's it going to go? And then also, I always think about having lived through a bunch of movies here when I get the phone call from this person and things are going great, how will we feel? And when things going terribly, how will we feel? And I want them to feel reciprocally like we're all in this together. So David kind of met that sort of test in 2010. We met David and the reason we got involved in the promotional products business was that category is a super interesting category because the category itself, from 1992 to 2008, 2009 had grown from about a couple billion, 78 billion to about 17, 18 billion or 19 billion by about 2009. So you had nice long term growth category. The reason the promotional products business was going growing, I'm sorry. Was you were seeing expansion of printing capabilities that were able to be done cheaper. So it used to be like you'd have to have these big steel rule dies and large print presses to print promotional products. You're seeing more technology, whether it's on the screen, print side, on the digital side, et cetera. So more innovation. In addition, you were seeing frankly bigger ability to more sophisticated businesses doing, working with larger companies. So the promotional products started working with larger and larger businesses, growth in imports and then also sort of things around technology. So it used to be initially promotional products who buy the huge catalog. As the Internet started to emerge, you were seeing more and more ease of doing business. So anyway, the category was growing and it looked pretty good. So growing category number two we liked about the promotional products business was we knew that by investing x amount of capital, the returns on invested capital could be very attractive because if you bought pieces of equipment, they could last a long time. You could do a bunch of good stuff. Gross mortgages were attractive. So that was good. Number three was the industry is highly fragmented. As those businesses had grown 7 billion to 19 billion, it was still a lot of small businesses and a lot of people making single product categories. There was a chocolate guy and a pen guy and this guy to that guy. So a lot of fragmentation. And then finally we saw by investing capital, there was ability to create a differentiated platform which could be sort of have step function changes, whether it's through technology, through food safety or product safety, through different pieces that we knew could build a differentiated business. So all of those underpinnings were there. Plus, this is a category that, because it was a lot of entrepreneurs had got when it went from 19 billion to 16 billion, a lot of thinly capitalized businesses, their balance sheets blew up. So we saw a situation where we could provide capital, come into an interesting market, build this platform, and we wanted to find a partner. So David Miller became the partner, and it's been an unbelievable decision because he's been an amazing partner ever since. So since that initial acquisition, we sat down with David Miller. The company he owned was called Chocolate in. It was his family's business. The company in 2010, similar to other businesses in the category, had grown and shrunken or had come off. And we saw an opportunity, though, with David, to grow and build the business. So David's business in the promotional products business, chocolate in, was a custom chocolate molder of chocolate bars and gifts, ostensibly. So chocolate bars with your logo or your name directly on the chocolate bar, and then gifts with chocolate gift sets. That was the business he had. And the strategy that David and we came up with, which has been the strategy, let's say, for the first seven or eight years before we expanded beyond the edible category. But the first seven or eight years of building ANsI custom, the strategy was that we studied, and we studied the promotional products distributors, we studied the top websites, the promotional products distributors, we studied what the end users were buying, and we basically said, this is the product family that chocolate and has, which was at the time, was chocolate bars and gifts. And this is what the category desires are. And we looked at the checkboxes that were on Foreman's website, and they were looking for faster lead times and more imprint colors, et cetera, et cetera. And so we basically built a business engineered around that market demand. And what then became started with that initial chocolate business, which did very limited imprinting, we sort of laid out on the back of the napkin, for real, back of a napkin, what we wanted that business to look like from a print capacity perspective, from a product line perspective, from a range of price points we want to cover. And then through organic growth as well as m a growth, we sort of have been building that thing, that thing out. And that was sort of the first six or seven years of the NC custom story.
[00:23:43] Speaker B: Where was chocolate in based the original acquisition?
[00:23:46] Speaker C: Freeport. Freeport, New York.
[00:23:48] Speaker B: Okay, when you say limited imprinting, imprinting, you're talking about the ability to just actually stamp a piece of chalk with a company's logo.
[00:23:56] Speaker C: Yeah. So if you look at the promotional products marketplace with a range of customization, if you look at the range of customization capabilities, they include screen printing, pad printing, digital laser, a whole range of things. Chocolate Inn's customization capabilities at a time were custom molding chocolate, being able to put your logo directly on the chocolate, printing wrappers to put around the chocolate, and then very limited printing on boxes, which is called hot stamping. They were hot stamping of boxes. That was it. And that's a very small subset of the promotional products marketplace. The reason that is, is because, as you know, a lot of logos are multicolor. Marketing messages are vibrant and bright. So having a limited range of imprint capabilities with a limited product offering was a challenge. And the reason the product offering was a challenge was during the summer months, people didn't want to eat white chocolate. They wanted things that were non melt. So we had a vision to expand our range of non melt products and to expand our range of imprint capabilities so we can offer vibrant full color as well as a range of products like mints and other things like that, that were non melt. And that was kind of the strategy behind the initial part of the chocolate and gross story.
[00:25:08] Speaker B: How many acquisitions have occurred just within the NC custom business?
[00:25:12] Speaker C: Twelve.
[00:25:13] Speaker B: And have you consolidated these businesses in any way after you've acquired them? Has there been a consolidation process in terms of how they're run or where they're run from? Just what has been the post acquisition approach within NC custom for the twelve businesses?
[00:25:28] Speaker C: Yeah, sure. To kind of finish off the story. So we acquired the confectionery business. Then we added another business that was actually canadian based, but had called Taylor and Grant, which was strong in the everyday part of our business. Now we level loaded our manufacturing facility, and we moved that company from Canada to our manufacturing facility in New York. Subsequent to that, we acquired businesses that were very strong in the specialty printing business. We called Al Cartline, which did flexographic printing and die cutting. We also moved that facility into New York, bought another business called Plague.
[00:25:59] Speaker B: When you're moving to New York, you're talking about Freeport, or you're talking about the original Nassau candy site.
[00:26:04] Speaker C: So initially to Freeport, and then we took the whole thing and we moved it into the overall facility. I see. So we integrated each one of the food businesses and the food related businesses initially into Freeport, and then. Yes, and then we ultimately moved it into Hicksville, which is where our manufacturing facility on the food side is located. And then subsequent to that, we added a business. I guess the first four or five acquisitions, probably best way to put it, is they were all promotional products driven in 2017 or so. 16. We woke up, we said, you know, what are the other markets where short run custom printed products matter. And our answer was travel and resort. Because if you go on vacation, you're going to see Aspen or New York City or Las Vegas, et cetera, and all of those short run printing capabilities, digital printing, pad printing, screen printing, et cetera. The way they apply, the same way they apply in corporate. They also apply in the travel and resort category. So we decided to build out an analogous business in the travel and resort category. So chocolate in and sort of the acquisitions, initial pep acquisitions, were corporate driven. And then we started building out the travel and resort business. We consolidated all the food and food related companies, initially into Freeport and then into Hicksville. So right now, from a customization perspective, we have about 150,000 sqft on the edible side of customization. And the non edible side, we about 100,000 non edible, which I'll sort of get to in a sec. So once we acquired those businesses on the foods, roughly 2017 18, I got a phone call, and it was a guy I'd known for a while, and his business was in actually mostly a little bit in the food business, but mostly a non food business. This company is called Lanka. The company had been sort of a rock star at one point in the promotional products business, and had come off for a variety of reasons. The reason we went after that business was at the time, 2% of the promotional products category is food based. The biggest categories and promotional products are apparel, hard goods, and bags. Acquiring this business, that was a non. What's a hard good drinkware? That's probably the biggest hard goods category. And so like a mug. So by acquiring a business that was in the bags, hard goods, and also a piece of business, the personal care business, by acquiring that business, it took us from covering 2% of the promotional products category to about 50% of the promotional products category. And we also pick up a non edible facility, ostensibly. So we acquired that business. Lanko, and then that became the vertical or the platform for our non edible customization business. And then into that business, over the last four years, we've added other businesses that do screen printing, embroidery, sublimation in the apparel business focused on the corporate markets as well as the travel and resort markets. And that's kind of been sort of the trajectory. So building out these two facilities, edible and none edible, that form a full range of customizable products, has been the NC custom story.
[00:28:58] Speaker B: So you made a big bet in 2017 2018, particularly in the travel and resorts category. Let's just talk a little bit about travel and resorts in the context of the last couple of years with COVID what happened there? How do you guys manage your way through that? Was it as disastrous in promotional products as it was for airlines and hotels? What happened there?
[00:29:16] Speaker C: No. Great question. So in 2017, we made the bet in the promotional products business travels to our business. 2020, to your point, we were having record year 2019. 2020 rolls around and business was off to the races the first couple of months and then obviously troughed pretty hard in the core business. But we were kind of fortunate in some ways. And the reason we were Fortunate was in 2017, as part of the acquisition of Lanco, we had acquired a business that was, as I mentioned, was in the hard goods personal care business and soft goods business as part of their personal care business. Lanko was a filler and formulator of hand sanitizer. And so in 2020, March 2020, I was coming home from actually meeting at land. I was meeting at Landry's in Texas, and I had spoken with our procurement team right before that, and we discussed some challenges we were having getting bottles out of China for our regular hand sanitizer business and frankly, some of the parts for our lip balm business. And I was like, guys, I don't understand Chinese New Year's over, like, what is the deal? And nobody can give me a clear answer. And it was before the COVID news, quote unquote, broke in a real way in early March in the US. And I was sort of playing with this idea, and I was like, sand sanitizer, even though it was a 10% of our business in the Lanko business, was still an important category for us. And I was like, I don't know how we're going to fill this category. And so I came with the idea. I was sitting on the airplane coming back from Landry's, and I came with the idea to, because we're in the flexographic printing business, printing film, and because we were FDA certified, I came with a concept of taking this film and converting it into a packet, almost like a ketchup packet, but like twice the size of a ketchup packet, to serve hand sanitizer, dispense hand sanitizer. And this packet concept became like an absolute rocket ship for us because nobody in the US at the time was able to get bottles in scale or plastic packaging in scale. And so having these gel packs, we call them gel packs, became like the item from March till June of 2020. So we were actually doing very little, to your point, in travel and resort business, generally speaking. We're doing very little in a promotional products business, generally speaking. But hand sanitizer was super strong, however, with one caveat, a portion of our travel business doing very well. Our sort of travel business that we're in, we are very strong in the national parks and we're very strong in some of these tourist destinations that are pretty outdoorsy. It's kind of been one of our strategies since we're growing the national park. So, in fact, our travel and resort business was only down like on core travel and resort products, maybe 25 or 35%, whereas the category was substantially down like 60 or 70%, maybe more 80%. And so we were able to offset that weakness a little bit because we had more resilient customer base, particularly national parks. And then separately, the hand sanitizer business became a big win and it was kind of cool. We had the filling piece of it, but in addition to that, it was actually a little bit crazy and fun and all that stuff. We figured out where to get ethyl alcohol from and so we ended up contracting for ethyl alcohol months out. And then we ended up using a portion of that ethyl alcohol for our own conversion and manufacturing hand sanitizer. And then separately, we ended up being able to sell a portion of that ethyl alcohol commitment to other folks who needed ethyl alcohol to convert to hand sanitizer. So we ended up selling some of it to hand sanitizer producers. We ended up producing some stuff for ourselves. And that was the economics of it. The personal side of it was crazy to get the team working as hard as we did. We're really lucky. And the backbone of our company is sort of the team, of course, and my CFO, who's. I'm exceptionally close us with, and he's been with us for a long time, came to me in 2020, in March. And I was nervous that we all were nervous about what the future of the company was going to be. And obviously we wanted to save the business and take care of people because. Exactly. You said, peter, the core business was not in a great spot. And he came to me and about eight years before this, we had had about 6ft of saltwater in our promotional products. Philly in Freeport, at which time during. After Hurricane Sandy, at which time we had been fortunate and worked exceptionally hard, frankly, to repair our equipment and keep the business alive. It was a very intense period in our lives where we were able to, frankly, once before, save the company in the custom business for many reasons. But what it really came down to is a well coordinated and hardworking team of really great people that I'm fortunate to be a part of my CFO came to me, who also runs our procurement department in 2020 in March, and he goes, Lance, we've already seen this movie, and we did this once before. We can do this. And him saying to me, I got your back. Basically, we're going to do this. And then the type of people we have in our company, our plant management, our procurement team, people being all in to sort of make stuff happen is what makes stuff happen. So we were able to keep the custom business to your point, Peter, on good tracks, thank God. And then what we were able to do then is reinvest, because those early days were scary, but be able to reinvest that capital in acquiring additional business. So fortunately, out of that period, we ended up acquiring another business, our Ace USA business, in the fourth quarter, quarter of 2020. That business, to your point, didn't have some of the insulation that we did, so to speak. And we were able to buy a company that was a top three player in the travel and resort merchandise business with an amazing design team and amazing manufacturing capabilities across apparel and hard goods that transformed our travel and resort business in the back half of 2020. So we turned, I guess, a negative into a positive.
[00:35:21] Speaker B: Did you guys flinch at making that acquisition in the middle of 2020? That seems like a pretty brave moment. It wasn't like 2021 even yet when you made that acquisition.
[00:35:33] Speaker C: Look, over the last 80 years, the equity markets have gone up 7% a year. Some are up, some are down, but if you have a long term perspective, you're okay. So we took the perspective that this is a great business. It's like a once in a lifetime type of deal situation. The seller was looking to get out of the business.
This is part of a larger family office, actually. And their business historically was in the real estate business, and they'd gotten into the private equity business and owned this asset. They were looking to get out. And we saw this as kind of a once in a lifetime type acquisition. We bought the business, fortunately at a fairly good discount to the asset value. So I knew if there was a problem, as long as there was a market, I can't get out of the assets. So we bought it well, and we picked up an amazing team, and it's been transformative for us. But look, I've spent my life and my dad's spent his life as an entrepreneur pricing risk and everything in business is calculated risk. And ultimately, it's about driving risk, just returns. And so we, frankly, we bought well, we had an opportunity by great business that would be transformative for us. And we mitigated our downside, and that was kind of how we went with it.
[00:36:41] Speaker B: That's really amazing that you were acquiring businesses in the travel space in 2020. I didn't know that. Good for you.
[00:36:47] Speaker C: Sure.
[00:36:48] Speaker B: 2021 was an incredible rebound year in that regard. When you sort of think about the last 1015 years, Lance, just what are some of the big things that you feel like you've learned? How have you developed over this 15 year period? Building a family business, integrating your deal mind and your deal appetite with the more messy side of the game, which is building companies, forging order out of chaos. Just what have you learned and what sticks out to you in terms of how are you different today versus where you were 1015 years ago when you got into the business?
[00:37:20] Speaker C: Sure. Well, some of it's been business lessons. Some have been personal lessons. On the personal side, much more importantly, I'm a father of three children, and I think I take a perspective that I work exceptionally hard. I love working with our family, like I talked about, but I love my kids at home. Right. I'm a dad. So to me, the biggest personal change for me has been a father of three children. I have a nine year old, a six year old and a four year old. And they give me balance and perspective, but they also help cheer me on. And that's amazing. I took my daughter Lizzie to each acquisition we've done that's been local as we've done them. She walked a screen print facility with me that we bought for the first time. She's walked other business with me. We bought a bakery recently, and she was my first taste tester for the cookies. And that's awesome. And so that's the biggest personal change from a business perspective. What's changed for me is I've learned a couple of things. Number one is when you graduate college, when you're applying for a job, and et cetera, et cetera, it's so much about the, I like, I need to do this and it's all about me and all that stuff. If I were to say one thing that's changed from me at 27, and I hope me at 40, I guess, is how much I value the we. And we're all in this together.
We are nothing without our team. We're nothing without our people. We're nothing without the culture we've built. And I think I have a real appreciation for how important that is, how important it is to coach and lead and manage and work together. I didn't appreciate that twelve or 13 years ago at all I was still learning and growing as a professional, much as I am every day now. But it was definitely been a big change for me. I think the other big change for me has been thinking a lot of it's on the personal and the management side, understanding in management when to push and when to pull back, and understanding when something is absolutely urgent and when something can take a little more time. And just really understanding that has been pretty important for me. I think from an investment perspective, having seen a bunch of cycles, 2000 I was 2001 cycle, then again eight, and now 2020, it's given me some perspective on investing over the long haul. Understanding how to price risk in various scenarios has been pretty good. And then I think having the way we've built our various businesses, as I mentioned, has been through partnership and getting to know people. I think when I joined our business, as I mentioned, for me it was my dad's lesson about partnership and getting to know people. Now that I've been running the business for a while and I'm sort of taking the lead on a lot of stuff on the m a front that we're doing, I'm the one who's working to forge a lot of these relationships. And I think having a real understanding that in private equity, when you buy a business, you build a relationship with management, but you go back to your office and they go to theirs. And when you're in the family business, in the context we're in, really having an understanding that we're in this together and that we're having now seen a bunch of movies, that things are going to go well, things are going to go less well. And being comfortable making that phone call or taking that phone call in good times and bad times, is something that over the last twelve or 13 years, I've become comfortable with and is something that I enjoy doing. I enjoy doing that with folks that we partner up with, but I also enjoy the front end, getting to know them, getting to know their families. So those are kind of the things that come to mind as I think about the last twelve or 13 years. From a development perspective.
[00:41:05] Speaker B: Clearly Dexter has had a big influence on you, maybe overall as a professional, certainly also in just the deal business and working as a private equity professional, which was sort of chapter one or chapter one b for you, is there a person who's been the sort of most significant influencer of you or developer of you in your role as the CEO, who's developed you the most, whether it's someone near and dear like your dad, or whether it's like someone you've never met before, but who you draw a lot of sort of inspiration from and a book you've read or a person whose life you've followed. What's influenced you the most as a CEO or who?
[00:41:43] Speaker C: Yeah, no, great question. I think there's actually three big constituencies. Number one is my dad. Absolutely.
My dad has been there to coach me and lead me and cheer me, but also teach me the whole way through. And whether it was growing up as his son at the dinner table and learning about the business at a young age and hearing about his business building stories, I mean, every night around the dinner table when I was a kid, we were talking about business, and it's been my entire life. And going into the role of running a business and learning from him. Absolutely. My dad and my uncle are Batman and Robin. So while my dad has been my dad and we're super close, my uncle has been amazingly helpful for me in learning about navigating. My uncle, historically has been more active on the sales side, the marketing side, the product development side, and he's coached me a ton in terms of sales, marketing, creating products, product development. My dad has been more of my coach on the finance, the personnel human resources side. I mean, that's been kind of where they've kind of both coached me. So I would say one a and one b is the second constituency that's taught me a ton is our people. You learn from everybody. And so I've been fortunate to surround myself with great coos that we've had on our team, plant manager, division presidents, et cetera. Each one of them you learn from and you hope that you contribute too. So I think that's super important. And I think the third piece of this that's been super helpful to me and Peter, I know you've been a member as well, is young president's organization. My YPO form. I've been in now since 2010. We've lived highs and lows together. Initially, the group was one portion of the group, and then over time, that group's evolved. But we've been on this journey together. And some of the members that I've been with for twelve plus years, not necessarily in our business, right. They're people who are in the technology business, the real estate business, private equity business, all sorts of businesses, but having their coaching and leadership. Initially I joined, I was one of the younger members in the forum. Now I'm kind of in the middle in the forum, towards the upper portion of the forum. It's been amazing and having folks like that around has been great. So I would say those are really the three spheres of influence. Lance, I know.
[00:44:05] Speaker B: I could go on for another hour. I know you can't. I've learned a ton today. There's so much here in the Nassau story. There's family business, there's acquisitions. There's the transformation from a New York Long island based chocolate distributor into the footprint that you guys have today. There's more than dozen acquisitions, as well as a ton of great people and a ton of great organic achievements that draw the line between 1984 and 2022. I feel like we only scratched the surface today, but it's great to have you on. That's really interesting to hear a little bit about your own journey to learn about the way you made your way into the business. I've learned a ton. I definitely would love to have you back on. We can do a deeper dive into family business dynamics or a deeper dive into pure. Just a deep dive into promotional products or a deep dive into chocolate. There's just so much here, but we'll leave it there for now. Thank you so much again for making time in a very busy fourth quarter for Nassau.
[00:44:59] Speaker C: Candy. Peter, thank you for having me. And I think, just as a final thing, if I could, it was an honor to be sort of involved in this small business. M a. And I know that folks who are listening, because I've listened to a bunch of your podcasts, are people running and building businesses who are thinking through a bunch of similar things. And I've heard it from others on your podcast, and I enjoy thinking about it. And the thing that just comes to mind, my mind is in M a when you build the house, it's all about building the levels of the foundation. Know, building on top of that foundation and the foundation of everything we do is trust and partnership and friendship. And, you know, I think that Nassau county as a business will continue to grow and evolve, and we've done a lot of interesting things, hopefully do a lot more. But it's really that backbone that kind of gives us the ability to do what we do. And I'm impressed, Peter, as I listen to your podcast, you've done and others that that's been the backbone of so many businesses. And so the final message I'd want to leave everybody with is, we've got a great business. We're fortunate that we're growing and building and doing all these great things, but at the end of the day, it's fun. We trust each other, and we're kind of all in this together. And yeah, that's what I think about as we go into your point the last eight weeks of the year, which will be fun and challenging and busy, but we're ready for it.
[00:46:33] Speaker B: Yeah, there's obviously so many thousands of interesting organizational success stories out there, but I certainly agree with you. The common thread always is the people, the quality of the people, and the culture that unites them. There's no version of a successful business that doesn't have that at the foundation. And it seems like no matter how many times that's proven out to us sort of over and over and over again, it's still something that organizations can lose sight of accidentally or just get distracted by the issues of the day or the fires of the day. So appreciate you mentioning that. Lance. Couldn't agree with you more. And like I said, thanks for coming on the show. I wish you the very best in the fourth quarter and look forward to having you back on in the future.
[00:47:12] Speaker C: Thanks Peter. You're welcome.
[00:47:18] Speaker A: If you enjoyed this episode, check out axial.com. There you'll find every episode of this podcast, as well as our recorded Axial member roundtables, some downloadable tools for dealmakers, Axial's quarterly league table, rankings of top small business acquirers and investment banks, and lots of other useful content that we've created over the course of time. If you're interested in joining Axial as either an acquirer, an owner considering an exit, or as a sellside M A advisor, you can get started for
[email protected] as well. Lastly, if you have ideas for podcast show guests, feel free to reach out to me directly at Peter at.
[00:47:55] Speaker B: Net.
[00:47:55] Speaker A: I promise I will respond. Thanks for listening.
