Bought an HVAC Business, Almost Lost It All, Then Did 9 More | Nathan Lindley

What does it look like to buy a business with zero industry experience, nearly go broke twice, and still build a 10-company HVAC roll-up out of McKinney, TX? Nathan Lindley lived it.

In February 2020 — just weeks before COVID shut down the world — Nathan closed on his first HVAC acquisition using his own equity, his dad's retirement, and an inheritance loan from a friend. The business came with exactly one technician who held all the leverage, an owner-dependent customer base, and a model that almost ended Nathan's entrepreneurial career before it started.

After 15 years running a book publishing company, Nathan wanted something more consistent. What he got instead was a crash course in why buying a $250K mom-and-pop with no operational experience is one of the most dangerous moves in small business acquisition.

In this episode, Carson and Nathan break down:

• Why his first acquisition almost killed the entire vision
• The straight-commission overhaul that turned the business around and unlocked scale
• His "buying at-bats" framework — why he ignores current profitability and targets call volume instead
• How he competes against private equity-backed HVAC giants without paying their Google ad prices
• The roll-up playbook he'd use if he had to start over today
• What he'd buy instead of HVAC — and whether he has any regrets
• Why he believes most PE firms in the trades can't actually operate the businesses they acquire

Now working on acquisition number 11 and eyeing a potential exit within the next year, Nathan shares the hard-won lessons that only come from almost losing it all — twice.

Whether you're an aspiring acquirer, a roll-up operator, or an investor looking at the home services space, this conversation is a playbook in survival, incentive alignment, and building real enterprise value in a fragmented industry.

Connect with Nathan Lindley: https://www.linkedin.com/in/nathanlindley/

Transcript

SPEAKER_02 0:00

We're closing on our 11th deal.

SPEAKER_00 0:01

And so that should put us up to about sixteen million of revenue and hopefully four and a half to five million of profit. Today's guest is Nathan Lindwick, an entrepreneur who overcame near bankruptcy twice to build a nine acquisition HVAC empire in Texas. Oh my gosh. Every single morning for about two and a half years, I would wake up having a panic attack.

SPEAKER_02 0:20

And it was like I'd be getting ready, my kids ready for school, I'd be making their peanut butter and jelly, and I'm just doing the math in my head of like, how am I gonna make payroll?

SPEAKER_03 0:29

So what was kind of like a transition from like being like, oh crap, we're getting our ass kicked on a daily, weekly basis to where you really kind of turned it around. So so when you see stuff online, you know, like on social media, I know you're not on it a ton. You're on LinkedIn here and there, I see it, but you know, people talk about boring businesses. I don't think any of them are really boring. What do you think?

SPEAKER_01 0:53

They're boring from the outside, but they are exciting as crap once you're in them.

SPEAKER_03 0:57

Yeah. You know, you got private equity coming in, and how are they kind of looked at from the industry? Is it like people don't like them or they do? It's a double-edged sword, obviously.

SPEAKER_02 1:06

Like, I mean, like you're saying, everyone wants to sell them. You know, every HVAC owner wants that giant exit, which is only going to happen through private equity, but at the same time, there's like zero respect for their ability to manage a company post-close. It's definitely there's there's a dual nature to it there.

SPEAKER_03 1:21

Well, let me ask you this what are you looking for in a company when you acquire it?

SPEAKER_01 1:26

Essentially, what I'm doing is I'm welcome to the Carson's Quarter.

SPEAKER_03 1:32

Alrighty, I'm sitting here with Mr. Nate Lindley. Is it Nate or Nathan? Whatever you want, man. I'm good. I'm gonna call you Nate, man. I had a buddy I grew up with called Nate. I love it. He he is in the HVAC business, had a long journey getting there. Um, Rocky ride early on with just one employee, bought a business for 250,000, had one technician, but he is now on his 11th roll-up of HVAC company. So he's got a long story to tell. So, Nate, how are you doing, buddy? I'm doing awesome, man. How you doing?

SPEAKER_02 2:04

Good, awesome, awesome. I've actually got a manager right now in uh in Nashville. He's looking at a couple opportunities out there for us. So oh, really?

SPEAKER_03 2:12

Wow. Yeah. So like HVAC business? Yeah. Yep. Yep. Austin.

SPEAKER_04 2:17

Yeah.

SPEAKER_03 2:17

So what part of Nashville? Is it like a suburb like Mount Juliet?

SPEAKER_02 2:21

I couldn't tell you the exact towns that he's that he's in, but it's somewhere about an hour east of you. So yeah.

SPEAKER_03 2:27

Wow. Yeah, man. Hour east. It's probably Cookville or uh I think it is Cookville, I believe it's Minville or something like that. Okay. Yeah. Awesome. So uh you didn't you didn't exactly start off uh acquiring other HVAC businesses. You started with one employee and you kind of like made a pretty big mistake uh thinking you were gonna get in there and just you know. Yes. When you got into the business, do you feel like it was kind of one of those things where you overdreamed of how easy it would be or just a hundred percent?

SPEAKER_02 3:00

Yeah, yeah. So so kind of the the background was um I had 15 years of running a book publishing company with my dad together. My dad had been in the industry for pretty much my entire life, and we we started this kind of Christian book publishing thing together, and it was cool and it was meaningful, but what there was a glaring problem from the business perspective, which was it was highly discretionary. No one had a product. And after 15 years of kind of fighting that war, we were both pretty tired and and broke, frankly. And so um, and I had read one of the Rich Dad Poor Dad books kind of along the way where he had he had kind of as almost like as an aside talked about, oh, by the way, you can buy businesses, and we had bootstrapped our our company, and it was so painful that this this idea that I could just buy revenue, and on day one, my phone is ringing, just it was stuck in my brain. And I married the coolest girl in the world, man. She'll let me try almost anything, and it's just I mean, I got seriously blessed in that. And so when we were shutting down the publishing company, I'm like, I I have to try this idea of buying a company and just having cash flow on day one. And and where in my social circle at the time, nobody was doing anything even remotely like this. I I didn't, I yeah, I wasn't really on LinkedIn, I didn't know about ETA, I don't think it was really even much of a thing back in like 1819. Um yeah, so so I was kind of like the icebreaker uh to go and do that. So I had a list of different verticals I was looking at, I was looking at like fencing and roofing and plumbing, and you know all these things that now I think are are pretty common investments. But I didn't yeah, so uh long story short, landed on HVAC. Uh my wife and I, we sold a rental property that we had up in Portland that had done pretty well. We bought it in like 13 and we sold it in 18, so it was a pretty good ride up there. Um we had like like 300,000 in equity that we took with us uh out of that. We moved to Dallas and we uh closed on our first acquisition in uh February of 2020, which of course was literally about two weeks before the outbreak of COVID. Wow, yeah, yeah. That's crazy. It was totally crazy, and and kind of the the rationale that I had in the moment was well, this company's made 250, 300,000 a year for the last 15 years. I'll just buy it and just not change anything, and it'll continue to do what it did, right? I mean, it it makes so much sense on the surface until you get into it. And you and I mean there's so many things that go wrong there. And and one of the one of the initial things was that the owner was the guy who answered the phone. So the second that contract was signed and he wasn't answering the phone anymore, every single customer knew that something was up. And the strategy was we'll just we'll just keep sending the same tech out there and not mention that there's been a transition and no one will know, no one will care. And they told me they cared, they cared a lot. And then on top of that, the one technician that I inherited, he knew that his new boss didn't know anything about the space. And so he would lie to me and just kind of tell me whatever suited him. Like if it was raining outside and you know, it would just, oh, I I can't work today, it's raining. Like, yeah, better, you know? Yeah, so um, yeah, so he it it was it was a very rough start. Um, I made I made every mistake you could possibly make on that first deal.

SPEAKER_03 6:23

What uh I think everybody they don't understand until they actually buy a business or start one that you're gonna make mistakes. Um, I wrote a little pocket guide book, the red flag playbook, buying and selling businesses, but mine was I I signed a bad lease. Um similar to Sam Walton, you know, his first five, I think it was five and dime or whatever. It's in my book, and I already forgot, but uh, you know, the landlord can put in there, you know, these increases that just go like this. So you think you're paying five grand a month by like year five, you're like 10 grand, you're like, holy smokes, you know.

SPEAKER_05 7:00

Right?

SPEAKER_03 7:00

Totally being personally liable for way too long unless they're putting money in the game. I won't go at all, typically at my age. I'm well, I'm not doing leases. I I push people to buy, so I'm a commercial real estate broker, right? So I think ownership is the route to go. I've paid over a million dollars in rent over my life. But yeah, um, so like you're sitting there going, what in the hell did I get into? Were you making money at the time? Did that quick uh did the tech stick around, or did you just wait until you had enough revenue to hire another one? Or um, so uh there were kind of a couple things that happened simultaneously.

SPEAKER_02 7:38

So, so initially uh I I felt like things were going better than they were. I just I didn't I didn't as even though I had run a business for 15 years, yeah, there were a lot of problems and a lot of nuances to business that I had never encountered before because of the new that we did. And so um it so I I initially was didn't didn't realize how much I still didn't know. So I actually sucked my dad into helping me acquire a second company uh in November of that year. That was in Austin. So the first one was in Dallas, the second one was in Austin. And when we scaled, so the second one was a lot bigger, it was like two and a half, three million of revenue. The first one we had buying. Oh wow, yeah. Yeah. So now we're like three and a half-ish million of revenue. And that's when when when the scale took place, all of the leaks in the bucket got really big, really fast, and all of a sudden you you started realizing that this was not you did not have control over the way you thought you did. And yeah, and so uh and I had brought my dad in as a co-investor. He pretty much put his entire retirement into this thing. And oh yeah, that was a very, very, very scary uh scared to death. Yeah, absolutely. Yeah. Um yeah, and so we wrestled for the next and it was like about a year uh that we were just trying to figure out how to stop the bleeding and just could not figure it out. And I would have these days where we'd you know, we'd bring in, you know,$20,000 revenue, and then we'd have these days where we'd bring in$500 of revenue. And the thing that was so frustrating is that my payroll was the same regardless of the outcome. And so I'm sitting down in Excel, I'm trying to figure out how do I build you know some sort of a financial model that makes this all make sense. And I couldn't because I could never calculate my cost of goods. I could never figure out you know how much it cost me to go run a call. And so um, so I ended up running out of money, and um, I had a I borrowed more money from my dad, and and he was a little bit tapped out at that point. And then um one of my longtime friends from Oregon had he he and I had been talking for a while, he believed in what we were doing and wanted to invest, and um, and so he I took a hundred grand of his wife's inheritance from her grandfather to to keep the lights on while we kind of kept trying to figure all of the stuff out. And luckily that was all gone. Wow. Yeah, so now I've sunk my dad's retirement and my my buddy's inheritance uh from his uh you know grandfather-in-law, and feeling like a real hero at this point.

SPEAKER_03 10:15

So well, I mean, what you're describing is actually more common than you think. I think most businesses hit a point where they, especially early on, they can't sustain the harder hits or whatever because they're not as established as something that's you know 15 years old. But I think it's very, very common for, you know, businesses to almost go out and they, you know, double mortgage the house, but it's really incredi it's a heroic story uh for a lot of people because they don't experience that in their life. Right. And the psychology behind it, were you uh kind of depressed at the time or Oh my gosh.

SPEAKER_02 10:53

I I every single morning for about two and a half years, I would wake up having a panic attack. Yeah. And it was like uh, you know, I'd be I'd be getting ready my kids ready for school, I'd be making their you know, peanut butter and jelly, and I'm just doing the math in my head of like, how am I gonna make payroll? I've got you know, six dollars bank, I've got this much coming in from this job, I've got, you know, maybe we can land that job. I mean, like I as it's all I'm thinking about all day, every day for about two and a half years.

SPEAKER_03 11:19

I know, like I was like stuff's reeling in your head. You're like, I'm the worst, you know, husband or boyfriend or dad or whatever it is. I can't believe I did this, you know, and it was probably like once a week, once a month. You had better days than others, you know, but that's always going in the back of your head. What was I thinking? Do I close it down? Yes. But it's always like right within reach to be successful, you know. Um so what was kind of like a transition from like being like, oh crap, we're getting our ass kicked on a daily, weekly basis to where you really kind of turned it around. Right. So, so what there's there's kind of a beautiful thing about having your back against the wall.

SPEAKER_02 12:01

So there were there were decisions that I had known needed to be made that I wasn't making because I didn't want to offend key employees. And and I I falsely believed that they were irreplaceable. They were under close to irreplaceable. And so um one of the things that that had to happen was um I needed to get them to care about the outcome of every call. And and I would try creating quotas and and all this stuff. I tried going in and talking to them saying, hey guys, we're losing money. I we need to be making this much money a day. And it just wouldn't wouldn't move the needle at all. So finally when I had burned through my buddy's hundred grand that he had given me, I I literally, I think it had$2,000 in the bank on the the day after or the uh coming, yeah, the day day after payroll. And we were not bringing in like any revenue. And so I I drove I went into the office and I told the guys we're done. As as of right now, we I cannot pay you one more week. Um, so effective immediately, we're putting you on straight commission. Now, this was the change, this was the change that I I had been wanting to make for a while because we had done a simple experiment in my book publishing company where I put everyone on commission for like a couple of days, and the transformation their behavior was crazy, and we never really adopted it permanently because administrating it was really complicated, like documenting it all. But I had noticed in like within an hour of putting these guys, these guys were on commission, it just completely changed everything. So I'd always wanted to try this idea, but it got shot down unanimously by everyone. So finally, I I didn't have any more money. Like, if you don't bring money in, I can't pay you anything. It was just pretty the physics of it. Yeah, and so so I walked into the office and I said, Hey guys, I this is the situation. You you're going straight commission right now because there isn't a choice, and they all quit. I mean, like pretty much like yeah, just like walked out the door. And um, I had the like the the Friday before that day, um, had an indeed applicant come in who had worked straight commission before. And even though the ad wasn't a commission ad, he's like, Hey, I know you're offering hourly. I'd rather I should really like to do commission. And as soon as those words came out of his mouth, I'm like, dude, you're hire. Like, because I'm so desperate to try this idea. So everybody quits. I'm the only guy in the company, except for like the lady who answered the phone. So I'm ping-ponging between Dallas and Austin, um, you know, trying to pretend to be a tech. Um, and then this guy comes in, and this one employee out-earned the rest of my company combined. Wow. And he I believe it. Yeah, yeah. Because I'd had this one one particular employee, he was my favorite guy. Like I loved him personally, but he was at like 40 bucks an hour or something like that, and bringing in 500 a day in revenue. Yeah, you know, and I just couldn't, I couldn't get him to do any better. And so this one guy comes in and and he's he is out earning everybody else collectively. And I one day I'm I'm I'm my daughter's volleyball practice, I'm doing the math in my head, and I realize I could float the entire company off of this one man. Yeah. And I'm like, so there was there was this kind of sense of relief of like, okay, as long as I can just keep this going, I can at least avoid bankruptcy, and maybe someday I'll be able to get my dad as money back. And I mean, that was that was seriously like that huge. Yeah, all right, I can survive.

SPEAKER_03 15:41

Yeah, it was a big win. So my dad's not gonna kill me.

SPEAKER_02 15:45

Yeah, yeah, right. Yeah, and my dad and I have an amazing relationship, and he was he was like the most supportive guy like you could even imagine. But um, yeah, but um so that was the turnaround moment for me. When I saw what the power of aligned incentives uh could do in your company, it absolutely transformed our trajectory. So everything, every technician after that became a commission-only role, all of my installers, because in HVAC, there's there's technicians and there's installers who have kind of different roles for silly reasons. Um, and and so I put I put basically, long story short, every single person in my company is a commission-only role now. So everybody gets gets paid. So, and so what we're always trying to do is we're we're trying to think about that the task that needs to be uh done and the outcome we're looking for. And we're saying, what is that outcome worth to us? What is a an answered call worth to us? What is a booked appointment worth to us? What and and there's sometimes there's multiple answers to that because if it's someone who's on who's on a maintenance member, that's not that hard to get that maintenance member to book their appointment that we've already precommunicated. But if it's a if it's a customer who hasn't used us in five years and we're reactivating that customer, that's worth more to us, and it's a harder outcome to achieve. So we build a commission structure that kind of accommodates how difficult it is to achieve, how important it is uh strategically to the company. And so our CSRs, they're all paid commission based on how many calls they answer, based on how many appointments they book, based on who it was that booked that appointment. Um, and so every single person in our company eats what they kill.

SPEAKER_03 17:19

I saw you had a post about, you know, the number of calls you're doing and stuff like that. And you're really, you're really like, I don't know, I don't want to say hyper focused, and you might be, but you talk about like your call and your stats and how many calls and your conversion. I think almost every company out there loses to some extent on that. Even like apartment complexes, you know, people come into their website and lead capture, and it's like, how many can you miss? Like I have a I have a thousand people a month that go to my site. I mean, I'm not like super huge, you know, but it's like, okay, how many am I not talking to? So I have my little chat thing that, you know, you can automate all that. It's pretty crazy nowadays. Like you upload a QA where they can ask anything, and then right after you ask for their information, you know. How many people go to your site and you don't ask for the information? You know, back in the day you had to sit there and and and keyboard and chat with them. So yeah, absolutely. 100%. But I think just in any business, that lead capture and conversion right out of the gate is so important, you know what you're talking about. That that first interaction, it's like they they trust you based on like the first 10 minutes. That's where you build it, you know. Yes, I say you have to like build trust and interest in that first impression. They have to trust you now too, and not think you're some crook that's gonna rob them. So I well, it used to not be that way, but everything like when you log into Facebook, all the videos are fake. So totally I mean, so they they like stuff, they want stuff where you look real, and you know, those trusted interactions are like, oh, I found somebody real. I've been looking at fake people all day on Facebook, you know. Yeah, yeah. Somebody that cares, you know, it's a real human, right? Absolutely.

SPEAKER_02 19:13

I think it's even bleeding into fashion now where like low quality graphics on t-shirts is actually what's in because high quality is so easy to achieve now that it's like you know that's pretty funny.

SPEAKER_03 19:27

At least it's real, right? Yeah, exactly.

SPEAKER_02 19:29

It's like you know that somebody actually intentionally made that.

SPEAKER_03 19:32

Yeah, yeah. So you you bait I I love your business, you know, how you turned it around, and you were probably thinking, like, what a freaking idiot I am from not doing this from day one. You know, something like that, and you're like, oh gosh, you know, yeah, yeah. I feel like a dummy for almost losing the company. Now I, you know, I've been there, I've I've made changes. I was like, gosh, that's that was like five years ago. I should have done that. Um, I wanted to um so when you started scaling, the way you're doing your business is I have another company where the employees like basically split with me. Like we're partners. I treat the employee and they and it's just they're less needy too. They like just kind of they take initiative and they go and they go do their job. When you pay them by the hour, they're always doing questions, want you to hold their hand and stuff like that. So yeah. So that is that kind of what allowed you to scale as like, you know, these employees are taking charge and really the driving horse behind your growth, or uh yeah.

SPEAKER_02 20:38

I mean, basically, yeah. Um, and so you know, aligning incentives, making sure that we both win for the same reasons and we both lose for the same reasons. Um I'm not in the customer's home. You are, yeah. I need you to care about what I care about, and I need you to suffer the same ways that I suffer, you know, and so yeah, you know, if and if you're at you know 28 bucks an hour, kind of regardless of the outcome, you don't really care unless you're just like the exceptional person who just has the you know the purest heart. You know, I can't I can't find that at scale.

SPEAKER_03 21:18

Well, yeah, 300 pure hearted individuals. So so has that helped you recruit the best talent too? Because like I'm sure there are the techs are like telling their friends, oh, I'm you know, they pay me commission, but I'm making this, and they're like, well, one percent is what I'm making.

SPEAKER_02 21:35

You get a totally different kind of person applying for a straight commission job. It is it is a different individual, is someone who's confident and competent and and knows that that at their current position, they're making their boss a ton of money and they want a slice of it. And so and that is the individual who's attracted to a straight commission position. And it's not just for the techs, again, it's every Everyone in our company, so all of our CSRs are paid on commission. And so the first that we get are the ones who know that they can book an appointment.

SPEAKER_03 22:08

You know, another thing that does is it reduces theft when they're paid better, because you're always having to battle the nightmare. And I don't know where your business is located, but friends I've had and like HVAC plumbing, people are always stealing their equipment. It's expensive equipment. Like you have stuff that probably costs three grand for a little gadget or whatever. Absolutely. For sure.

SPEAKER_02 22:32

Yeah. Yes. And that was that was when we had our hourly employees. Um back back in when things were not going well. I drained my personal savings account to make payroll. And then I found out later on that these the exact people who were taking the money out of my personal savings account for their payroll were stealing from me.

SPEAKER_03 22:50

Yeah. Oh yeah. Yeah. I know. Yeah. Yeah. It's pretty uh I I've seen all kinds of stuff. I've had employees try and pass counterfeit bills. I'm more I get more irritated with employees that they think I'm that stupid. Well, so I I don't have many now, you know. Yeah. And the ones I have are on commission similar to you. But you know what irritates me is when they have a story for not coming in. I'm like, you know, I was your age at one point. Just tell me you got drunk. You know, just be honest. Yeah. Like they have these stories, and I'm like, you I'm more pissed about you really think I'm that stupid. Yeah, right. Exactly. You know, exactly. You're not gonna make it into work. I'll get over that. But it's just crazy stuff, dude. Don't lie to me though. Yeah. Right. But um, no, this is all good stuff. Um I like the business model. So you're going for what did you say, uh your 11th roll-up now?

SPEAKER_02 23:49

Yeah, like literally, once you and I are done here, I'm gonna head over to the bank and and uh wire some funds over. Here, let me give them a bank account real quick. Not you didn't. Yeah, we're closing on our 11th deal. And so that should put us up to about 16 million of revenue and hopefully four and a half to five million of profit.

SPEAKER_03 24:08

So well, let me ask you this. What are you looking for in a company when you acquire it? Yeah, so we're really different.

SPEAKER_02 24:15

And as part of what's helped us is that we're not looking for what everyone else is looking for. Essentially, what I'm doing is I'm buying, I I the way I term it is I'm buying at bats. And so if you've ever read the books in the movie, the movie Moneyball, um, you know, you're you're you're creating a a dollar value for for every opportunity. And so I know that if if John's AC ran 2,000 calls last year and say he made a million dollars in revenue, so he's averaging$500 per call that he ran. Our average call value last year was$1,477. So I know that if I buy John's AC and he's doing a million a year, if I have John's A C, I'll do 2.94. And so yeah, and so that's that's essentially how we're buying it. I don't really care how much profit John's A C is making right now. That's not because because every single there's there's so many decisions that play into how much profit you have. There's there's uh you know, how many calls you run, uh how good your sales guys are your technicians are uh uh uh finding opportunities and selling them, what your pricing is, how you structure your overhead uh to you know to be frugal or or lavish, you know, all of those things. And every single one of those decisions post-close, I have control over. So I know the decisions that I'm gonna make, and and and so the value that I'm gonna get out of John's AC is gonna be entirely different than the value that John's getting out of John's AC. And so but you know, most guys are trying to buy John's AC as it stands, and that's that's not how we think.

SPEAKER_03 25:49

Yeah. You have to look at the upside potential and all that. Um what what kind of uh rates are you paying? Like are you looking at a you know, like a 3x or 5x or yeah, but we would definitely not go to five because I have to cash flow or well it well I talk about that in my book. If you go higher, there has to be some land or something attached to it, like the building. If you you know, not every asset's the same. If they're leasing a building and it's cash flowing the same amount, if you get the building included, you know, there's a lot to it, the equipment and stuff, but you know Yeah.

SPEAKER_02 26:27

Well, and if you have the asset too, you typically have a longer amputation, which reduces your your monthly payment relative to the the amount of money they're borrowing. Yeah.

SPEAKER_03 26:36

Have you ever looked at cost segregation?

SPEAKER_02 26:39

Not closely. I mean, I I'm familiar with it, but I I've never found an application where I felt like it was gonna be beneficial to us.

SPEAKER_03 26:48

Not it's uh it's okay. I'm not trying to sell you. I'll uh I'll send you a little educational episode I have with uh Yona. It's pretty good. He's surprised me. I mean, he's talking about like R V parks and how you can like I don't know. It's like crazy stuff, and you wouldn't think RV parks would be that depreciable and you know, going by the real IRS tax code, and they kind of push everything up this way because they look at every little they look at every little material, and some of it's like wrongly in the wrong category, and really but it's uh it's pretty crazy, and it's not that expensive. He he was like, you know, you can do it on a$200,000 property if it's like uh you know Airbnb or whatever, and it uh it's worth it, you know, like a few thousand bucks, you know. Yeah, it obviously goes higher if you get into you know big businesses and stuff. Yeah, right, right for the amount for the amount of money, I was like, geez, that's a no-brainer. I've done it on some of my stuff, but um no beneficial outcome. Oh, yeah, yeah, yeah, yeah. Yeah. I I was gonna uh another one um is uh exits and opportunity zones. Okay. Yeah, we had a speaker at my event, and it we we try and keep it at uh the events educational and um you know talking about opportunity zones, tax-free. So 1031 exchanges are basically for real estate. And there's a problem with that. If you sell a business, it's not real estate. Well, it can be a part of it. But uh, if you sell a business, that's capital gains and an opportunity zone, you could put anything in there. It could be crypto, uh, hold it in there 10 years. And and you know, you think of opportunity zones as like these little crap places, and it's not always the case. Like some of these smaller towns are considered lower income. Yeah, you know, and they're like even uh Murfreesboro, Tennessee, like their downtown area just because it's on the outskirts of uh Nashville, it's one of the fastest growing cities in the United States. Really? It's always in the top 20, and you could dump money into uh opportunity zone there, hold it 10 years. You have to make significant upgrades, but that's not that hard. You know, you're gonna do some value add. So yeah. But there's a lot of rules and stuff like that in that, but I'm putting together kind of educational series on that. But yeah. No, I was just kind of curious on that. Let me um so what what states are you looking to acquire in? Are there like certain towns that you're not wanting to go to? And other ones you're kind of like, okay, we like that.

SPEAKER_02 29:25

Yeah, we want to be near major metro areas. Hopefully higher income is nice because we charge premium prices. Yeah. And then um, you know, really hot or really cold is always good. It you know, it helps with demand. Um, that's that's I I have a strong preference for red states. That's part of why I left Oregon.

SPEAKER_03 29:49

Well just uh regulation and the taxes. Yes, yes, all of the above. And I you know, it it can be over it can be overwhelming. I mean, I've lived in several states. I grew up in Texas, but I've you know, Tennessee wasn't my first, but sometimes you're like, do I really have to do this? Why are they asking? And I've even I've even seen some stuff in some red states where I'm like, golly, this is ridiculous, you know.

SPEAKER_02 30:15

Texas is is less libertarian, I guess, than I was expecting it to be. Yeah, there's a lot more theocracy here than I was hoping for.

SPEAKER_03 30:23

Uh, I can agree with that. Yeah. You know, I I don't know. I I I don't want to delve too far into it, but there's no too. It's probably off off centric a little bit. There's stuff I don't like about Texas. There's stuff I don't like about every state I was I've lived in. You know, there's stuff I don't like about Tennessee. So I wish they'd fixed the roads in Tennessee. Y'all have a lot of those. All the growth here, and then it gets really, it gets way colder than Texas. So these potholes, and I'm like, and then they they didn't, so Texas planned for the growth, Tennessee didn't, so these roads are just a wreck, but I I could bitch all day about that. Um so you know, you got private equity coming in, and how are they kind of looked at from the industry? Is it like people don't like them or they do? It's like their dream to sell to them. Right. You know, how's that kind of playing out right now?

SPEAKER_02 31:17

It's a double-edged sword, obviously. Like, I mean, like you're saying, everyone wants to sell them. So it you know, every HVAC owner wants that giant exit, which is only going to happen through private equity, but at the same time, there's like zero respect for their ability to manage a company post-close. So it's it's definitely there's there's a dual nature to it there. Yeah, and I'll say, I mean, I think some uh shops are operating fairly well, and then I've seen a lot of them where they they try and save money in some really weird places, like the people who are actually bringing the money in, you know, and so yeah.

SPEAKER_03 31:53

Well, I you know, uh I I forget who was telling me this, but the you know, that he's like, Oh yeah, they go in and cut the marketing. I'm like, you know, that's gonna kill the business long term. I mean, marketing's like you're not getting a sale like right then, but over time it's you'll start to see it go like that, you know. Yeah. But it it just seemed like a horrible idea. Um do you uh so uh another thing I've heard is like private equity is coming in, they'll buy up the businesses, but they're also like driving up ad words intentionally to kind of hurt the other companies. I mean, I totally believe it.

SPEAKER_02 32:27

I don't I actually don't market on Google at all for that exact reason. I I don't want it to go to toe I don't want to have to go toe-to-toe with a$200 million competitor.

SPEAKER_03 32:40

So yeah, I'm sure I I quit advertising on Google probably two years ago. It used to be effective, and then like one day I'm telling my partner, I'm like, I haven't gotten any business off of it. Yeah, and then it got more expensive, and I'm like your click expense, and I'm like, but it makes sense, you know, that they would rig it. You know, I I don't want to go too deep into talk like that, but you know, in in the so the minimum wage hikes was all like, you know, they start talking about it, but there's always an agenda. It doesn't matter whether you agree with minimum wage hike or not. I like your model where it's like, hey, go earn it, we'll pay you whatever. You can make unlimited, you know, that's the best minimum wage right there. But you know, like in Arkansas, they had one of the highest minimum wages in the country based on, you know, yeah, like compared to their average income and they raised it like compared per per capita, I guess you would say. So it was like up there with Seattle's. Really? Um, and it was pushed through, and they I the part that took me off is I know it was Walmart that pushed it through. You can't prove that. You can't prove that. I don't know for a fact, but somebody lobbied through DC that paid the$10 million for all the advertising, and they put this girl on there, you know, talking about how she has to live off of it, and did this sob story, and it got approved in a red state. But what it but what it really was was it was they tried to price fix it, similar to what we're talking about. What they wanted to do is bring in self-checkout to the Walmarts, drive up cost at the fast food restaurants so people would eat home more and use the self-checkout at Walmart. The way it backfired, though, here's the funny part is it backfired because everybody started stealing with the with the self-checkout. Yeah, it totally shot themselves in the foot. So now they so now a lot of them aren't even advocating for the uh self-checkout, you know.

SPEAKER_01 34:40

Oh my word.

SPEAKER_03 34:42

Well, the other thing is when you raise the minimum wage like that, people there's gonna be a certain amount that's cut, and it's usually the bottom people, and those are the most likely to steal from you. Right, right. Oh my god. I think overall, overall, and I can't prove that uh uh you know that's who lobbied for, you know, I did some research on it because everybody's like, how in the world did that get passed? And yeah, I mean it was like a 20% increase over like two years or something, something nuts, man. Um but yeah, I don't know. And then and then it's like you're in a little red state like Arkansas, and McDonald's is more expensive there than it is in a blue state, and you're just kind of scratching your head, how did this happen?

SPEAKER_04 35:24

That's crazy.

SPEAKER_03 35:25

Yeah. I think the experiment failed. Um I'm kind of getting that. I just I I was you know, wondering overall, the private equity probably doesn't run these businesses very well, do they?

SPEAKER_02 35:41

I I mean, not not trying to make any enemies with someone who might want to buy me down the road, but I would say generally, generally no. Um now I will say too, again, going back to the double-edged sword thing, they they do provide a lot of benefit to the guys who know how to run their companies well because we tend to get a lot of the good technicians who leave private equity back companies. Yeah, we also get uh price coverage because the PE firms are gonna be really expensive. Yeah, so we can still we can be also really expensive, but just slightly less expensive than them. And so our profit margins improve pretty significantly because uh their height in price is so high.

SPEAKER_03 36:24

So yeah. So if you were gonna tell your younger self, you know, you wouldn't get like a HVAC degree or go to trade school to do this business, would you? No, I mean uh uh No. Not now, not the way you're running it now. Probably when you did your first one, but but I think the problem with that is it teaches you how to be an employee. You know, you know how if you know how to work on the uh systems, do you know how to work on any of them right now? It's probably a good thing if you don't.

SPEAKER_02 36:59

I mean early on, you need to know a little bit because or or you need somebody who knows. Because we'll get lied to and stolen from. The employees will lie to you, yeah. Right, right. So you need you need if I was gonna do this again and I didn't know what I know, I would be looking for a really good technical partner. Someone that that I that I had a high, high level of confidence in that could handle the technical aspect of it because it's way more significant than I realized.

SPEAKER_03 37:29

Far more important than I realized. It it's more technical than you thought. Yes. Yeah.

unknown 37:35

Yeah.

SPEAKER_03 37:35

My my well, so I wanted to start an HVAC company at one point, and my granddad's been an HVAC his whole life. Okay. You know, he went to school for it and worked for I mean, he was still doing it it in his 80s, you know. He helped the guy start an HVAC business, kind of like what you're talking about. He was the kind of the technical side. Yeah, because the guy had no clue and just said, Hey, I want to start this. Can you help me? And he goes, Sure. Yeah. You know, my granddad's like in his 80s, getting on a roof, you know. Right. But I asked him and he said it, he said, you don't want to do it. He said it's too technical. He said, if you just want to own one that's easier, do plumbing or something. But I don't know. He he he talked me off it. So yeah. Um are you are you uh you're mainly uh residential, right?

SPEAKER_02 38:22

Yeah, uh almost entirely. Every now and then we'll you know we'll get a coffee shopper or something like that.

SPEAKER_03 38:28

Get a get a small one. Yeah, yeah. So when you see stuff online, you know, like on social media, I know you're not on it a ton. You're on LinkedIn here and there. I see you, but um, you know, people talk about boring businesses. I don't think any of them are really boring. What do you think? They're boring from the outside, but they are exciting as crap once you're in a movie. Yeah, I just I don't know. You just see things online, you're like, golly, this is just crazy. I mean, you've never it it almost exposes them as like you've never ran one of these businesses. There's always 100%.

SPEAKER_02 39:03

100%. I feel like that's that's such dangerous advice right now, too. And and pretty pretty common advice is yeah, just go okay an HVAC business and make a million a year, Mike. Or go bankrupt, you know. Yeah, yeah.

SPEAKER_03 39:19

Yeah. Um, so when you do your acquisitions, what do you focus on the most? Are you looking at the financials?

SPEAKER_02 39:27

I'm looking at call volume. And and specifically, I'm looking at the the the number of calls that they ran uh and measured against the revenue that they generated. And the lower that number, the better for me. Yeah, because that means that there's more upside potential for me. So I know that if they, like I said before, if they ran 2,000 calls and generated a million in revenue, I can nearly triple that number off that same call volume.

SPEAKER_03 39:54

So I I put in my book, you know, I think one thing is you need to know the financials, but I think what I say is people overfocus on the financial. Yeah. And it's usually something like the lease, like Sam Walton and myself, you know, just because you're like looking at this, or you're just so some like sometimes you're just so excited to be starting a business, you're gonna over you look at the financials and then you skip over all the operational. There's so much operational risk and other things that you don't know that you basically uh skip past. So it's like you you have these blinders on oh, it's everybody does it on their first one. I know I was so excited, it was like, oh, my first business. Now I'm like kind of cautious. I'm like, I don't know. Let's research it, but I like your mentality, you know. You definitely need to protect the financials.

SPEAKER_02 40:47

So um yeah. Well, I think what one of the things that happens too as you as you get deeper into any industry, if it's real estate or if it's a particular line of business, you start to understand where the money comes from. And you know, what are the underlying parameters that will generate the revenue that I'm looking for? Yeah. And so once you kind of reverse engineer, is it is it is it uh you know, price per foot, or is it you know locational, or is it you know the the lease structure that you know um if you can kind of reverse engineer how do how do I get the outcome that I'm looking for, then you zero in and focus on just those elements and maximizing your price to those to those underlying criteria. So like in our case, I'm buying the number of customers that call this company every year. And so I'm trying to try to get as low of a cost per call as I possibly can. I'm not really focused on the profitability or the revenue because I know that the revenue is the outcome of the call volume, and so I'm actually buying the call volume. And so so if I pay a million dollars for a company that gets 2,000 calls a year, that's$500 a call. I know that that is or is not acceptable to me.

SPEAKER_03 42:05

Yeah, that's crazy. I love that. I wrote a little book that's that's my uh I don't put it on the podcast very often. It's like about buying and selling businesses. I'm not really trying to sell it, but I just talk a I I wanted it to be a really short little guide. Yeah, you know, like a little airplane book. I wrote one for real estate that's too long, and I'm like, I'm never writing a book that long again. You know? Right. Well, they tell you it's gotta be a certain length, and I'm like, and then I I I got it to 200 pages on my own, and everybody thinks it's easy. They're like, oh, you just use AI, you know, and I'm like, yeah, it's really hard, man. Yes, yes. But uh on that one, I had to I what the way I did use AI is I asked it, okay, I'm at 200 pages, how do I get to 300? And then it's like go out and interview people and put that in there, and it it did help me, but it was still wasn't easy. Right, right. But I like my little pocket guide, it's just little little stuff. So that's awesome. Um I I appreciate you coming on. Um, you know, if you need anything, um, are you looking for investors or anything?

SPEAKER_02 43:12

You know, not at the moment. We're we're probably gonna start working on selling the company here in the next year or so.

SPEAKER_03 43:19

Um need help with that, and you know, I'm not one of those brokers that cold calls, but I can definitely help people. So, you know. Yeah, no, that's awesome. People need an exit. I I'm uh I'm degreed in finance from Baylor and I've you know used to work in accounting, so I understand that side. I know how to I know how to package it up for real estate and stuff. So anyway. But uh regardless, um, you know, I'll send you a couple uh you know things on like uh cost segregation and um I love that and uh opportunity zones for when you do exit and stuff like that. So Yeah, man. I really oh what's a good way for people to get in touch with you if you want them to call you?

SPEAKER_02 44:06

Yeah. Um, so I'm super active on LinkedIn. You know, I'm just kidding. Yeah, no, it's all it's all good. I I love talking with people. So um LinkedIn is is probably the best place to find me. I'm also pretty active on X. Um Okay.

SPEAKER_03 44:19

Awesome, man. I appreciate you coming on, buddy. Man, nice having you.

SPEAKER_02 44:23

Yeah, absolutely. Awesome. Thanks, bud.