go eric's a safe guy to do business with

well and that and that's what it comes down to so the re now just to explain like why people you know do seven times uh leverage ratios it's because they're trying to max out return on equity so one of the ways to max out return on equity right it's uh think of it as how much to get that right it's like When I sell this business five years from now, how much was the equity value over how much equity did I put in? That's a multiple.

That's one way to think about return on equity and other ways to calculate IRR.

think just think of it that way so though as you know a numerator and a denominator the numerator is what was the equity value when you sold it the denominator is what was the equity that you put in when you bought it well no big surprise there's two ways to max max that out either make the numerator really big or make the denominator really small So what private equity firms do is they use high leverage ratios in the cap structure.

There's two sources of cash, either debt or equity.

Well, if you put in more debt, you don't have to put in as much equity, and therefore, theoretically, your return on equity will be higher as long as you don't go into insolvency.

We don't do that at Spaceside because we tend to buy things that we want to transform.

Can you kind of talk about this? I know it's a lot at one time I'm asking you, but I think it's really important for people not just to go take the biggest one because that ain't always the right one.

You want to kind of delve into that and explain what is value-based pricing?

Yeah, so value-based pricing is a function of understanding what makes your customer profitable and pricing accordingly.

And again, that's very important to do segmentation because the more you do segmentation, the more you understand about the customer and how their business runs.

And that's also why like high, deep and wide matters.

And also, you know, another really good book is selling DeVito, very important top officer.

What matters at one level of the organization is different from the middle versus, you know, maybe people just starting their careers, right? Everybody has, different goals and metrics.

So understanding how the company makes a profit, your customer makes a profit and therefore creates value, right? Because they're trying to create value in their business by improving their EBITDA and EBITDA margins and free cashflow.

And I know that's a lot to ask in one question.