Working on second SMB. Did a traditional search the first time and grew the business to $25M+. Buying and building to grow HVAC and plumbing business.
New England
Joined March 2023
- Tweets1.9K
- Following502
- Followers2.8K
- Likes2.8K
Pinned Tweet
This was my SMB outreach funnel for my first acquisition. Searching is rewarding, but also hard as shit.
Emails sent: 133,982
Companies contacted: 34,044
CEO calls: 577
LOIs shared: 22
LOIs signed: 6
Businesses acquired: 1
FYI - This is not great searching. Better to have smaller numbers and higher conversion rates.
HVAC searcher turned operator retweeted
We run a service business.
We aren’t perfect.
We’ll try hard.
If anyone is considering hiring global talent, I would highly recommend @SaganPassport.
I think you can really tell the quality of the organization by how they treat you went things go wrong.
In my case, a candidate search was going differently than expected and @kayvonbina himself stepped in and made it right. Now we have a new team member that everyone is excited about!
It’s an excellent company with great people!
If anyone is considering hiring global talent, I would highly recommend @SaganPassport.
I think you can really tell the quality of the organization by how they treat you went things go wrong.
In my case, a candidate search was going differently than expected and @kayvonbina himself stepped in and made it right. Now we have a new team member that everyone is excited about!
It’s an excellent company with great people!
HVAC searcher turned operator retweeted
One time I sent an email to a mayor of a small city in Minnesota asking to buy his city. And, he responded…
It was back in 2018, I was scraping businesses from LinkedIn in bulk and emailing them. For some reason this city had a business LinkedIn page so they got an email.
I was using people in the Philippines to help me find names of CEOs and email addresses. They were paid per email so they found the mayors name and email and didn’t mention anything.
After the first email he didn’t reply, but he got an automated follow up a week later, which he did reply to. He clearly thought the request to buy his city was serious and sternly said that his city was not for sale.
This was both the funniest and lowest point of my search for a business to buy.
It wasn’t until I personally vetted each business that I emailed and cut the volume dramatically that the search became successful.
To be clear, I do allow pre approved absences. Those were never the problem.
Over 30% of the company called out the Friday before Memorial Day.
I decided to create a policy that says they have to come to work both the day before and the day after a holiday to be paid for the holiday.
Not one person missed work yesterday.
Incentives are powerful!
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Over 30% of the company called out the Friday before Memorial Day.
I decided to create a policy that says they have to come to work both the day before and the day after a holiday to be paid for the holiday.
Not one person missed work yesterday.
Incentives are powerful!
HVAC searcher turned operator retweeted
It's strange to think that 3 years ago:
- @SBA_Matthias wasn't on SMB Twitter
- @SMB_Attorney wasn't on SMB Twitter
- @sbabmarks wasn't on SMB Twitter
- @lawyer4SMBs wasn't on SMB Twitter
- My friend @tradesearcher wasn't on SMB Twitter
- I wasn't on SMB Twitter
Crazy how fast the world changes...
Last post for the evening
It’s crazy to think right around this time to the day 2 years ago, I discovered SMB Twitter from @SAOliver_Atty (former bank counsel that I worked with at some SBA lender shops)
Fast forward one year and 10 months later, and I think back on what a journey it’s been — starting @PIONEERCAPADV in May of 2022 and meeting awesome folks on Twitter that I’ve worked with including @SMB_Attorney, @sbabmarks @lawyer4SMBs @CBarrett_CPA & various others)
This year amongst those at that table in this picture, over $1 billion of M&A will close. It blows my mind.
The level of enthusiasm and ingenuity in the space that I see is off the charts.
From Twitter, I’ve met my accountant, wealth planner, business insurance agent, one of my business attorneys, and have had life changing outcomes in more ways than one.
I look around this platform and I see folks starting businesses, buying businesses, deploying equity to help entrepreneurs buy businesses, and taking their talents to improve the lives of others, whether that is through an acquisition or something different
Whatever it is you’re doing in this space, keep on keeping on, and make the rest of 2024 a great year
-Matthias
HVAC searcher turned operator retweeted
PSA: this deal was done in 2018 and the opportunity is nonexistent today.
I was the CEO of a 300+ person ABA business and I can tell you that this is a very difficult business to be in.
There is a huge amount of demand for these services, but it is very difficult to find practitioners that will work in a tough environment for $20 per hour.
In 2018 and 2019 everything was rosy for this industry, growing demand, high rates, affordable labor, and active PE backed rollups.
Everything has changed since then. Rates have leveled off, inflation has driven labor cost increases, and the largest PE backed rollup went bankrupt.
Only get into this industry if you want to help children.
PSA: this deal was done in 2018 and the opportunity is nonexistent today.
I was the CEO of a 300+ person ABA business and I can tell you that this is a very difficult business to be in.
There is a huge amount of demand for these services, but it is very difficult to find practitioners that will work in a tough environment for $20 per hour.
In 2018 and 2019 everything was rosy for this industry, growing demand, high rates, affordable labor, and active PE backed rollups.
Everything has changed since then. Rates have leveled off, inflation has driven labor cost increases, and the largest PE backed rollup went bankrupt.
Only get into this industry if you want to help children.
Jimmy is a great follow, if you like following good people that know real estate!
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No matter what your ambitions are majoring in engineering will prepare you best for them
Real estate ambitions -> engineering
Investment banking -> engineering
Private equity -> engineering
Entrepreneurship -> engineering
Hedge fund - > engineering
Convince me otherwise
This has to be some kind of record…
Bought a truck, broke down same day
Just one of the joys of entrepreneurship!
Just have to remember that this is why the opportunities exist. Most people aren’t willing to go through the pain.
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I haven’t shared much lately, but I’ve seen some of the backlash on anon accounts. I’m not sure anyone cares, but I stay anonymous so that I can share without having to worry about customers, competitors, and employees. I also freely share my identity with anyone that wants to connect, which I do often and is one of my favorite parts about twitter. Just FYI.
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HVAC searcher turned operator retweeted
Who would be interested in attending a 1-day event at my "Shared Services" office?
Optional dinner hosted by my team the night before.
Who?
Residential service SMB owners and Hold Co owners. Some seats reserved for ETA / searchers and select SMB service providers.
What?
Deep dive into "shared service" ops supporting a >$100m OpCo, a real estate portfolio, and an active investment company (alts + public equities + direct investments).
Will include call center ops, inside sales, IT / technology stack, finance & accounting structures & processes, purchasing & and supply chain structure, etc.
Where?
Saint Louis, MO
When?
Q1 2024
Why?
Facilitate a great learning / sharing experience for attendees. Build new relationships.
Let me know in comments below if you meet the "who" definition above and would be interested in a trip to STL.
RTs would be helpful to extend reach.
Sorry I haven’t been more active on X lately. I’m heads down building. I’ve never been more excited about my business. Will report back when I come up for air.
HVAC searcher turned operator retweeted
The average searcher is paid ~$1M base salary and ~$6M equity over 5 years. They create on average ~$20M in value for investors. Are they underpaid or overpaid?
59%Underpaid
41%Overpaid
222 votes • Final resultsThe average searcher is paid ~$1M base salary and ~$6M equity over 5 years. They create on average ~$20M in value for investors. Are they underpaid or overpaid?
59%Underpaid
41%Overpaid
222 votes • Final results HVAC searcher turned operator retweeted
Here is how we compete with PE consolidators to attract & retain the best Home Service senior executives & operators via our Profit Interest Program.
First, let's understand the typical mechanics of PE's approach to profit interest programs.
- 5-year vesting
- a tiered waterfall, with senior share classes receiving preferred returns before profit interest program participants see a dollar (and sometimes they don't)
- only pays out upon a subsequent sale or qualifying recapitalization
Our approach is different.
- 5-year cliff vest
- Our phantom cap table has a fixed number of units, with a strike price equal to current unit value at the time of grant
- Each year, we take a formulaic approach to determining unit values by using a fixed EBITDA multiple, multiplied by calendar year EBITDA, and divided by number of units in cap table. We publish updated unit values in January of each year
- any incremental increase in unit value (driven by incremental EBITDA growth) above the strike price accrues to participant
- participants can carry units forward indefinitely (subject to minimum redemption requirements upon vesting); I want participants to be incentivized like owners and think about value creation over years. not months or quarters.
- participants can redeem any part (or all) units after they are vested by giving notice during the 30-day notice period following our published financial results for the most recent calendar year
- if a participant leaves prior to units vesting, they forfeit unvested units, and all vested units are immediately redeemed
- we don't have to sell our business for participants to receive their compensation under the program. and if we designed the program well... it is big "win-win"
How are you thinking about attracting top-tier talent in your own business?
HVAC searcher turned operator retweeted
I once hired 12 interns for the summer for my search fund. Needless to say, it was a terrible mistake. Was trying to be an overachiever and it was awful.
The next summer I thought I would be smart and only hire 4… Also a mistake.
In my final summer of searching I only hired 1. I think that was the only case where the situation was mutually beneficial.
Moral of the story, less is more with search fund interns. Management and training is very time consuming. All of these interns were incredibly smart and driven but it didn’t matter. Just do it on your own.