04/22/2025
So true
On paper, this one looked like a winner.
$7.5M in revenue
$2.1M in net
25 years in business
Over 50 employees
15 service vehicles
No advertising—just long-standing relationships and referrals
They were asking just under $7M, which puts it at about a 3.3x multiple on net.
Not outrageous… if the operation can run independently of the owner.
But once we started digging deeper, several issues came to light.
That $2.1M net… After accounting for owner compensation, personal expenses, and a few tax advantages, the real EBITDA was closer to $1.5M.
The systems in place were rudimentary at best. The business relied heavily on legacy knowledge and a hands-on approach.
The owner was deeply involved—handling client calls, scheduling jobs, and overseeing the team.
There was no layer of management to step in. No recurring contracts. Just project after project.
Now we’re looking at 4.7x on actual earnings, with a significant owner transition required.
Look, we’re not afraid of outdated systems. We’ve revamped plenty.
But we invest in cash flow, not narratives. The numbers need to support any overhaul.
We still saw potential in the business. Strong reputation. Committed staff. Healthy project pipeline.
So we crafted two offers (kudos to Lisa, our financial wizard—she’s been crucial in analyzing these deals).
Main offer:
$5.5M total
$550K down
20 quarterly payments to the seller
Working capital included
Seller-friendly terms, allowing for a smooth transition
Bank-financed option:
Lower valuation,
More cash at closing,
Cleaner deal but not as favorable for the seller.
We led with the stronger option because it seemed like the best fit for everyone involved.
In the end, they chose another buyer.
No hard feelings.
We’re not here to overpay or pursue deals that don’t make sense.
Because we’re not buying dreams. We’re buying service companies.
And if the technician is the only one who knows how to fix the systems, then all you’ve purchased is a tool belt and a headache.
We’re ready to improve processes. We’re willing to invest in management. But the numbers must align.
Every single time.
If you’re looking to buy or sell a commercial piece of property or a business, feel free to contact me 516-279-8828.
