Welcome to Upper Market

We finally have a release date for my first book:

“SPEEDRUNNING CAPITALISM”

Sunday 21st September (7PM NZT)

The book is straightforward. It covers business acquisition as a method of wealth creation and is a guide for the pathway you can expect to travel.

Details of my own journey are in there, written how you’d expect me to speak: clearly not a scholar, much closer to someone with basic literary skills, always starting with the big picture first and figuring out the details later.

How much is it and how can you get your hands on this?

Price: Literally $1 (or the lowest price Amazon will let me charge). This is for the entire pre-release campaign and for anyone who pre-orders before the official release date.

In addition - Everyone who pre-orders will get access to:

CLICK HERE TO PRE-ORDER

What's ahead in this Newsletter:

YouTube Videos from the Week:

Some businesses get more profitable the busier they get, fast. Others just get busier. The difference is operating leverage, and it's one of the most valuable - and most misunderstood - things you can buy.

Here's the mechanic. Every business has fixed costs - rent, machines, core staff, the owner - that don't change much whether it's at half capacity or full. Once those are covered, a big share of every extra dollar of revenue falls straight to profit, because you're not adding much cost to earn it. A factory running one shift can often run two out of the same building, on the same rent, with the same management. The second shift is dramatically more profitable than the first.

So when a listing says the plant has "capacity significantly above current production," or the business has "proven ability to operate at substantially higher turnover," it's describing spare operating leverage - and that can be genuine, cheap upside. You're buying a half-full machine. If you can fill it, the profit grows faster than the revenue, and you didn't have to build anything.

But leverage cuts both ways, and there are two traps. The first: spare capacity is only worth something if you can fill it. Empty capacity plus no demand is just cost sitting idle. Before you pay for the upside, ask why it isn't full already - is it a marketing problem you can fix, or a demand ceiling you can't? The second trap is the downside: high fixed costs mean that when revenue falls, profit falls faster too. The same leverage that rewards you on the way up punishes you on the way down.

Spare capacity is upside you don't pay to build - but only if you can fill it, and only if the downturn never comes.

The trick is to separate the two questions the seller blurs together. What does the business earn today, at its current, real level of activity? That's what you pay for. And how much more could it earn if you filled the capacity - and how realistic is that? That's the upside, and you want it as close to free as possible, not to pay full price for a factory someone else couldn't fill.

Bought right, spare capacity is the best kind of growth: it's already paid for. Bought wrong, it's a story that lets a seller charge you today for revenue that may never show up.

Short Summary:

Around $863k of EBPITDA, three-year average. Asking $1.95m - about 2.3x. And the model behind "clips the ticket" on every hour worked.

This is a 10-year-old Auckland labour hire business that places skilled staff with blue-chip clients and earns a margin on every hour they work. Recurring revenue, fast payment, lean overhead, and - importantly - not construction. On the model and the numbers, it's a genuinely attractive cash business. The questions are what the "specialised sector" actually is, and how sticky the placements really are.

Skilled workers are placed with established clients, and the business earns a margin on every hour billed - income that flows from ongoing placements rather than one-off recruitment fees, which gives strong weekly revenue and good forward visibility. It's traded profitably for over a decade, through recessions, government changes and a pandemic, on loyal long-term client relationships. Fast 7-day client payment, strong margins and low overhead mean it converts revenue to cash unusually well. The seller says a buyer needs no industry background - people and organisation skills matter more.

What I'd Want to Understand:

First is what the "specialised sector" actually is. The listing is deliberately coy, and it matters enormously. A specialised, non-construction labour pool could mean healthcare, traffic, security, aviation, industrial - each with different licensing, different labour supply, and different client economics. The whole risk profile hides behind that one undisclosed detail, so it's the first thing I'd want named.

Second is how recurring the recurring really is. "Ongoing placements" are stickier than one-off fees, but they're not contracts - a client can wind down a placement whenever their own workload drops. I'd want the average placement length, client tenure, and how revenue moved in the softer years, to see whether "recurring" means genuinely contracted or just habitually renewed.

Third is client and worker concentration on both sides. A labour hire business has two customer bases: the blue-chip clients who pay, and the skilled workers who deliver. I'd want the revenue share of the top few clients, and just as important, how the business finds, keeps and pays its workers - because in a tight labour market, the people you place are as scarce and as critical as the clients you place them with.

I’m wary that candidates in labour hire may not necessarily be the most desirable workforce. The business becomes an operation in managing this talent and putting them in roles that are temporary - moving them around (potentially) often, while they may want to find stable work in the future. You are effectively in the business of hiring people, which comes with challenges.

Fourth is who runs it, and what the "P" in EBPITDA hides. "No experience needed" hints it's fairly systemised, but I'd want to know what the current owner actually does day to day, whether there's a manager, and exactly what's added back to reach $863k. The three-year average is a good, honest frame; the adjustments are where I'd still do the work.

Growth Angle: It's a lean, cash-generative platform, so growth is about doing more of the same: the seller flags an improved digital presence, adjacent categories, and new sectors. Add real lead generation and a second vertical to an already-profitable placement engine and the margin structure carries it nicely. It's also a clean bolt-on for an existing recruitment or labour-hire operator who can drop the client base onto their own back office.

The Drawbacks: Labour hire lives on other companies' hiring appetite - resilient here, but never immune to a deep enough downturn. "Recurring" placements can still be switched off at the client's discretion. And a specialised worker pool can be as hard to maintain as it is valuable. The cash conversion and the track record are real strengths; the diligence is about how contracted, concentrated and defensible that recurring revenue actually is.

Final Thought: A decade-profitable, recession-tested labour hire business with genuine recurring revenue and excellent cash conversion is exactly the kind of boring machine that makes people money.

It comes down to two answers: what the specialised sector is, and how sticky the placements are when a client's own work dries up. Get those, confirm the worker supply, and 2.3x for a real cash business looks well bought.

If you want more details on any of these businesses or would like an introduction to the sellers, just reply to this email.

$439k of SDE on about $1.5m of revenue, a three-year average. Asking $1.5m including stock - around 3.4x. A long-established, well-regarded bespoke fabricator, sold by the person who built it.

That last part is the crux. This is a skilled, reputable Wellington sheetmetal business with a loyal, diversified customer base and an honest averaged number - and an owner who's run it since day one. Everything good about it, and the main risk, trace back to that.

It does bespoke sheetmetal fabrication for commercial, industrial, architectural and residential clients, with a long-tenured team, a modern workshop, and a strong reputation for quality that generates repeat work and referrals. Revenue is diversified across sectors, the earnings are quoted as a three-year average rather than a peak, and the owner will do a full handover. On paper it's a solid, proven trade business.

What I'd Want to Understand:

First is the owner's role, because they've run it since inception. SDE adds the owner's salary back, and this owner has been the business for its whole life. What do they actually do - quoting, key customer relationships, the hard fabrication jobs, the books? Whatever it is, you inherit it, and the true hands-off earnings are $439k minus whatever it costs to replace them. The handover matters more here than usual.

Second is the team and the skill. Bespoke fabrication is a craft, and "long-tenured team" cuts both ways: deep skill and stability, but also key knowledge sitting with a few people who are that much closer to retirement. I'd want the team's ages, tenure and pay, and to understand how much of the quality reputation lives in specific hands versus documented process.

Third is the customer mix and the cycle. "Diversified across commercial, industrial, architectural and residential" is a genuine strength - but all four of those ride the construction cycle to some degree. I'd want revenue by sector and by customer over the three years, and a feel for how the business performed when building activity last slowed.

Fourth is the equipment and the workshop. "Modern workshop" and "quality fabrication equipment" are good, but fabrication gear is expensive and wears, and the premises are the base. I'd want the age and replacement schedule of the key machines, whether that capex is reflected in the earnings, and the lease terms on the workshop.

Growth Angle: This is a business bought for steady cash and reputation rather than a growth story, but there's room: it's owner-run and lightly marketed, so a more commercial owner could chase larger architectural and commercial contracts, add capacity, and lean harder on the referral reputation. For an existing fabrication or construction business, it's a capability-and-reputation bolt-on that's hard to build from scratch.

The Drawbacks: It's owner-built and owner-run, so the real earnings depend on replacing the founder well. It's a skilled-labour business in a trade where skill is scarce and ageing. And it's tied to the construction cycle. At 3.4x you're paying a fair, not cheap, price for a proven business - the return comes from running it well, not buying it low.

Final Thought: A reputable, diversified, genuinely profitable fabricator with an honest three-year number is a good business. The whole question is how much of it is the founder - the relationships, the quoting, the craft - and how much is a transferable operation with a skilled team. Spend the handover finding that out, price in replacing the owner, and 3.4x buys you a solid trade with a real moat in its reputation.

If you want more details on any of these businesses or would like an introduction to the sellers, just reply to this email.