In This Issue: 

• Dangers of Imaginary Value Creation Theses: Inside the dangers of creating a vision of what a boring business could become

• What We’re Watching: Markets Volatile Reactions to the War in Iran, China’s Growing Industrial Profits and The Hyperscaler Race to Invest in Datacenters

• Deal of the Week: We found a cash flowing Underground Utility Construction Business in Nebraska ($512k of Cash Flow). Click HERE for the listing (Deal Review Below)

• We sourced our YT subscribers business acquisitions LIVE. Watch the replay HERE and join us daily live on YT. W Stream to everyone who joined.

How I Almost Lost $6M Buying a Toy Business

I looked at a children's toy business on the West Coast last year.

$1.5M EBITDA. 4x multiple. Revenue growing 30%+.

Strong brand positioning with wealthier, younger families who wanted their kids outdoors instead of on screens.

Everything looked perfect.

Until I dove into the supply chain.

The business relied exclusively on China for manufacturing molds. Every single unit.

This was right before Trump's China tariffs hit.

I ran the numbers. The tariffs would cut margins in half.

I submitted an LOI anyway.

Why? Because I convinced myself I could fix it with "operational excellence."

The plan sounded simple:

• Reshore manufacturing to Mexico

• Find local production partners

• Continue the growth story

I pitched myself on the value creation opportunity. The arbitrage of buying a great brand at a discount because of a "solvable" supply chain issue.

Classic mistake.

A few months later:

We passed on the deal. The tariff situation indeed crushed margins.

But here's what I didn't know at the time:

The Mexico manufacturing relocation story? Would've been a 1–2 year operational lift. Minimum.

New mold tooling. Quality control issues. Logistics buildout. Vendor negotiations in a market I didn't know.

That's not a 90-day transition plan. That's a full-time job with no guarantee it works.

The lesson: Take the business as it is.

We aren't venture capital investors. We can't make up our underwriting story.

You're paying for what the business achieves today. What it's done historically. Not what you think you can turn it into.

Otherwise, you're buying yourself an 80-hour-per-week value-creation job with no PTO and all the downside risk.

The real question to ask:

"If I changed nothing, would this business still be worth owning?"

If the answer is no, walk.

If your thesis depends on you being smarter, faster, or more capable than the current owner—you're not buying a business.

You're buying a turnaround project disguised as an acquisition.

Bottom line:

Buy businesses that work today. Improve them if you can. But never underwrite to your own heroics.

The market doesn't care about your plan. It cares about cash flow.

WHAT’S HAPPENING IN THE MARKETS?

• Trump Extends Iran Energy Facility Pause to April 6

  Trump extended the pause on attacking Iran's energy facilities by 10 days at Tehran's request, claiming talks are "going very well." The U.S.-Israeli war against Iran began Feb. 28; the Strait of Hormuz remains disrupted.

  Why it matters: Each extension is a coin flip—oil markets price in resolution hope, then spike on headlines. Iran ships millions of barrels to China despite the war, keeping Beijing insulated while the West absorbs price shocks. April 6 is the new volatility trigger. Trade the whipsaw: long energy on headline risk, but watch for capitulation if diplomacy holds.

• China Industrial Profits Surge 15% Despite Oil Price Shock

  Chinese industrial profits jumped 15.2% in January-February, extending December's rebound. Full-year 2025 profits rose 0.6%, ending three years of declines. Beijing cushioned oil price shocks by capping retail fuel hikes at half the normal increase; Iran continues shipping crude to China.

  Why it matters: China's industrial revival relies on export-led growth while domestic consumption stays weak—a fragile foundation. Oil insulation from Iranian supply and strategic reserves blunt energy shocks, but this advantage evaporates if U.S. pressure closes that loophole. China outperforms on energy resilience short-term; long-term, overcapacity and consumer weakness remain unresolved structural drags.

• Meta Boosts Texas AI Data Center Investment Sixfold to $10B

  Meta increased its El Paso data center investment from $1.5B to $10B, targeting 1 gigawatt of capacity by 2028. This follows Meta's guidance of up to $135B in 2026 capex as hyperscalers race to secure AI infrastructure and supply chains.

  Why it matters: The data center land grab is accelerating—hyperscalers are locking in power capacity before competitors can. At 1 GW, this single facility rivals small cities' energy demand. Meta's sixfold increase signals desperation for infrastructure access, not efficiency. Texas power grid stress intensifies; equipment suppliers and utilities with contracted capacity win. This confirms AI buildout is supply-constrained, not demand-constrained.

DEAL OF THE WEEK

Nebraska Underground Utility Construction
Price: $1.73M | SDE: $512K | Multiple: 3.4×

Investment Summary

Underground utility contractor serving Nebraska since 1990. Revenue of $1.86M with 28% margins. Sole-sourced by developers, municipalities, and utilities based on proven track record. Specializes in utility installation and infrastructure repairs. Turn-key operation with experienced team in place.

This is critical infrastructure buildout positioned at the intersection of grid modernization mandates and climate resilience spending.

Investment Thesis

Utilities face an existential grid resilience problem. Above-ground transmission and distribution infrastructure is vulnerable to extreme weather, wildfires, and cascading failures. The 2021 Texas freeze, California wildfires, and Hurricane Ian demonstrated the fragility of exposed systems. Undergrounding isn't a nice-to-have—it's becoming a regulatory and insurance requirement.

Federal infrastructure spending through the IIJA and IRA allocated $65B for grid modernization. State public utility commissions are approving rate cases that include undergrounding projects. Florida mandated undergrounding in storm-prone areas. California utilities are undergrounding thousands of miles to reduce wildfire risk. This isn't a project cycle—it's a decade-long capital reallocation.

The business is sole-sourced for projects, meaning customers bypass competitive bidding and negotiate directly. This only happens when technical expertise, safety record, and execution reliability eliminate perceived risk. Thirty-four years of operating history with municipal and utility relationships creates a moat that new entrants can't replicate.

At 3.4× SDE, you're buying established utility relationships, specialized equipment, and trained crews during the early innings of a multi-decade infrastructure buildout. Nebraska's position in the heartland provides geographic access to Midwest utility markets without coastal cost structure.

Critical Diligence

Customer concentration: What % of revenue from top 3 clients? Sole-source relationships are valuable until one doesn't renew.

Backlog visibility: How much contracted work extends beyond 12 months? Infrastructure projects have long lead times—pipeline matters.

Equipment condition and capex: Underground construction is equipment-intensive. What's the fleet age and replacement schedule? Deferred maintenance inflates current SDE.

Bonding capacity: Can existing bonding support larger municipal and utility projects post-ownership change? Surety relationships don't automatically transfer.

Licensing and certifications: What credentials are owner-specific vs. company-held? Utility work requires specialized licensing.

Real estate inclusion: Is the facility owned or leased? If owned, how does that affect transaction structure and total capital required?

Bottom Line

Infrastructure contractor positioned for a decade-long tailwind in grid modernization and undergrounding mandates. Sole-source status reflects irreplaceable utility relationships and execution credibility. Pursue formal utility partnerships, expand into adjacent markets, target federal infrastructure grants. At 3.4× entering a multi-year capital cycle, this is mispriced infrastructure exposure.

Listing is still available here.

This newsletter is for informational purposes only and does not constitute investment advice. The content is based on publicly available information, and the author makes no representations about its accuracy or completeness. Readers should conduct their own research before making any investment decisions.