The Lede: The $2M EBITDA trap
There's a specific size where operators get stuck: $1.5M-$3M EBITDA. You're too big for search funds to easily finance with SBA. Too small for Tier 1 platforms to prioritize. The 8-9x theoretical multiple is real but takes longer to realize because buyer density in your band is thinner.
The fix isn't "grow faster." The fix is positioning yourself as the right acquisition for a Tier 2 strategic — a regional operator that's raised capital and is rolling up.
Tier 2 buyers care about three things:
Geographic fit. You strengthen a metro they already operate in or open a new metro they've targeted.
Service mix overlap. You look like their existing businesses, so integration is clean.
A #2 willing to stay. Because Tier 2 rarely has the bench to parachute in a new GM.
If you're in the $2M EBITDA band, ignore Tier 1 platforms for the first 12 months of a sale process and build relationships directly with 3-5 Tier 2 operators in your region. You'll get better meetings, cleaner deals, and often better multiples than a Tier 1 process that drags on.
Deal Flow
A sneaky-good deal: A 19-employee electrical contractor in Nashville sold to a regional strategic for 9.2x trailing EBITDA. $1.4M EBITDA, so roughly $13M total consideration. The interesting part: the seller had never talked to an investment banker. He ran the entire process himself with a lawyer, two direct conversations with target buyers, and a CPA to clean up financials. Keep-it-simple worked.
Apex Service Partners: three more add-ons in the Carolinas. All HVAC, all in existing metros, all sub-$2M EBITDA. Add-on mode continues.
Watts Water Technologies completes bolt-on acquisition of a regional plumbing distribution business. Worth noting because strategic acquirers (distributors, manufacturers) are a quietly growing buyer segment for larger operators.
Operator Tactic: The data room you should build before you need it
Most operators build their data room in the month after they sign an engagement letter with a banker. That's 3-6 weeks late.
The work to build a clean data room is real but not hard:
Three years of financials, formatted consistently, reconciled to tax returns
Monthly P&L by department for the trailing 24 months
Customer list with revenue and margin by customer (redacted for confidentiality)
Employee list with roles, tenure, compensation, and non-compete status
Vendor contracts and any concentration above 10% of COGS
Lease agreements, insurance policies, permits and licenses
Any litigation history (even minor) and current legal matters
Tech stack documentation — systems, access, data ownership
Owner-paid expenses that would normalize out in a sale (travel, cars, memberships, family)
Add-back schedule with documentation for each item
You can build this in 40 hours of focused work. Do it now. When you're ready to go to market, the "data room ready" conversation becomes one hour instead of six weeks, and your buyers read that as operational discipline — which is worth an extra 0.5x on its own.
The Toolbox: Hatch's follow-up automation
Hatch continues to be one of the most sponsored pitches in this industry, and for good reason — the core product (automated follow-up on quote-stage leads) consistently moves close rates for operators who weren't disciplined on follow-up.
Their new feature set adds SMS-based rescheduling and two-way text capture for missed calls. Early numbers from operators I trust: 15-20% lift in booked-to-completed ratio after 60 days of implementation.
The honest caveat: Hatch is relatively expensive and they require a meaningful implementation effort. If you're below $3M in revenue, the payback period is probably longer than the sales pitch suggests. Above $5M, it's often a clear win.
Ticker
• Blue Corona (SEO/digital agency) has been the subject of operator complaints around account management changes post-acquisition; worth pausing any new engagement until management stabilizes
• Service MVP's training content remains the operator training benchmark; their sales program is still the quiet standard
• Texas HB 4280 moves forward on contractor licensing reciprocity; watch closely if you operate in border metros
• Residential housing starts ticked up 2.4% in March, the first real move in 8 months
Sign off
Thanks for being here through the first three issues. If you've made it this far, you're the audience I built this for.
Keep building.
— AJ
