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Episode Summary
After a stint in finance doing mergers and acquisitions for J.P. Morgan in NYC, Nick learned the intricacies of P&L statements, financial analysis, and business valuation. He leveraged this knowledge and experience in finance to transform a modest HVAC shop with flat growth into a seven-figure business in his first year.
Nick’s acquisition was swift, closing the deal within 2-3 weeks during peak, summer season. He avoided external financing like SBA loans and P.E. groups, and instead relied on skillful negotiations. He capitalized on a likely small buyer pool to secure both his desired price and terms.
Reliable’s first-year goals include:
- Optimizing backend processes
- Implementing a well-structured pricebook
- Organizing their CRM system
- Establishing a solid digital marketing foundation
Nick discusses the challenges of valuing small businesses due to unreliable data. We discuss the low fidelity of SMB data and how it’s actually very hard to create a solid valuation.
He emphasizes that for smaller deals, the key is the buyer’s confidence in their ability to grow and improve the existing business.
The analysis was fairly trivial according to Nick because when deals are small, the owner’s sophistication tends to be pretty low. Therefore the analysis ultimately is whether the buyer has faith they can take what’s in the business present day and grow and improve it.
Ultimately Nick bought Reliable’s 4,000-customer database that offered significant reactivation potential, with only 100 loyalty members, 400 active customers, and 500 who did business once every few years.
Connect with Nicholas Matos
LinkedIn: www.linkedin.com/in/nick-matos/
Connect with Reliable Heating and Cooling
Website: www.relhvac.com/
Facebook: www.facebook.com/relhvac
LinkedIn: www.instagram.com/reliablehvac_clt/
The Boost, a podcast for home service contractors.
Join CMO of Lokal, Zach Wilson, as he explores leaders & innovators in HVAC, Plumbing, and Roofing, their personal journeys, thoughts and experiences with buying, selling, and succession planning.
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