Acquisition #2

How we got in contact

Every fall I email all of our local competitors and I send a short note about anything from the summer we maybe experienced in common, a moment where we referred work to each other, or anything I can throw in there so that it’s not just a cold email.

After that, I say we respect the work that they do and we enjoy competing with them in the market.

Last, I briefly add something like “I don’t know if you had considered selling your business or if you plan on running it for many more years. In either case, we would be interested in acquiring your company if that time ever came.”

I have had exactly 0 people respond and say they are ready to sell. However, I emailed Maverick December of 2023 and he emailed us out of the blue last month and said he was ready.

I was just planting the seed several years ago and letting the market know a few things. 1- we are willing able able to acquir them. 2- we are extremely serious about dominating this market and we are not going anywhere.

Other companies have responded and said they are not ready to sell but when that day comes we will be their first call.

Everybody wants numbers, here’s what we paid.

On companies with less than $1 million in revenue, we aim to negotiate our purchase price to as close to 1x revenue as possible. In this case, we ended up paying $180k or 1.2x revenue. We would not have paid this much if this was not already in our market. In fact, we wouldn’t have paid a dime if this wasn’t an easy bolt on to existing operations since a company this small wouldn’t survive an owner present or more help from other current operations.

Why revenue as a metric instead of SDE?

I don’t care about EBITDA or SDE in the slightest. I know that if this company does $150k in revenue, I can implement our processes, upsells, and service protocol to get margins to where they need to be. If the previous owner wasn’t making any money then that’s bad management, not a bad business. 90% of these companies run personal expenses through the P&L anyway so the expenses are convoluted and hardly matter. It’s hard to fake revenue.

On this deal, we didn’t even look at an income statement. He sent us over the revenue he had collected over the last 12 months and his asking price and we got a deal done.

It helps that we have been doing DD on all our competitors for the last 4 years. We know a lot of his customers, how much he charges, and how frequently he usually services so we were confident in doing a deal without much other research.

Closing took 14 days from the time he initially emailed us with interest to sell his business to the day we signed papers.

Deal Structure

$40,000 down

$140,000 seller financed over 5 years at 7%

(no banks, no brokers, no attorneys)

Assets:

2011 Ford Ranger with 86,000 miles

~150 recurring customers

~1500 contacts from previous services

With little DD we had some BIG surprises!

Yesterday, we had an HOA management company reach out and say they heard the news about the acquisition and they were looking for a provider that would be a little more consistent.

By the end of the day we had $28,500 in recurring contracts signed that were not in the previous company’s CRM. On top of that, they average about $10k a year in one time work they send us as well.

This is just a cherry on top we had not planned for. We also locked down 6 gas stations on monthly visits that were in the exact same position. The previous company lacked organization which cost them big money while they operated and huge money at exit.

Again, this is not a deal we would have done, had we not been in this market already.

A week before we closed, our mentor told us “you don’t need to buy every company on the market.” Meanwhile, we were under contract on 3 separate companies. All doing less than $250k in revenue. Our mentor is correct. You don’t need to buy everything. However, when they are in our market and we know them personally, we are more willing to pull the trigger even if they are small.

This little deal may turn into a home run over the next 12 months.

Where we are at now

This deal pushes us just over $2 million in recurring revenue company wide. With a little growth, one more acquisition, one time services, termite services, and an increased focus on cross selling current customers next year, we hope to do just under $3 million in revenue in 2026.

We then plan to slow growth a bit, pay off debts, and increase cashflow. We have been working hard and reinvesting like crazy to get to this point and we are ready to enjoy a little bit of the fruit of our labor.

Who knows, maybe a few more competitors hit us up and we have no

So why did Maverick sell after 8 years in business?

In his words “I was tired of banging my head against the wall while watching your company grow.”

We came in and wanted to be number one in the market. We have done exactly that.

He had one technician and realized that did not take any work off of his plate. He still had the same amount of work to do PLUS he now had to manage an employee. He saw that adding two, three, and even four employees was going to make his life harder, not easier until he could afford to hire a manager. Until that time, his life was going to be hard. It was easier to just sell to us and watch us succeed.

Plus, a 6 figure payday was a nice bonus after 8 years of work.