with Gottesman & Company listing · Well drilling / pest control / lawn services business
LenderHawk analysis. Not affiliated with or endorsed by Acquisitions Anonymous.
The hosts see a potential rollup or carve-out angle: the well/pump side and the pest/lawn side may each be more valuable to specialist buyers than the bundled company is to a generalist buyer. They also note that the real estate and hard assets help, but do not solve the financing challenge created by the SBA cap.
A $2.4M EBITDA business can be simultaneously too big for a plain SBA acquisition and too small for comfortable conventional debt.
Mixing well drilling, pump work, pest control, lawn care, and irrigation can create resilience, but it also obscures the true economics of each line.
When licenses are held by individuals, the buyer has to underwrite the transition of those licenses, not just the asset purchase itself.
Real estate inside the deal can improve the structure, but a $1M property rarely closes a multi-million-dollar financing gap on a business of this size.
A carve-out thesis only works if staff, trucks, and overhead can be separated cleanly enough to support two sellable businesses.
If the seller is only vaguely willing to stay on, that usually means the buyer should underwrite a harder transition than the teaser suggests.
The hosts use this to describe businesses with EBITDA high enough to exceed the $5M SBA cap but still not clean or financeable enough for standard non-SBA leverage.
When to use: Use it when a deal’s cash flow sits in the financing gap between SBA and conventional bankability.
The listing showed $9.8M of revenue and $2.0M of EBITDA in 2020, $11M of revenue and $1.7M of EBITDA in 2021, and $12M of revenue and $2.4M of EBITDA in 2022.
Michael reads the financial summary from the CIM and notes the business is growing top line while EBITDA fluctuates.
The deal includes about $1M of real estate.
The hosts discuss how the property affects financing and valuation.
The SBA cap discussed on the episode is $5M.
Heather and Bill use the cap to explain why the deal is difficult to finance conventionally.
Bill estimates that 2.4M of EBITDA at roughly 3.75x debt capacity would support about $9M of SBA borrowings absent the cap.
He uses this rule of thumb to show the size of the financing gap.
Heather notes that 504 financing can add some room for the real estate component.
She distinguishes the property piece from the operating company debt structure.
The business operates under five different SIC codes.
The hosts use this to highlight the complexity of the combined service lines.
Underwrite the transition of each required license before you get excited about the earnings number.
Why: Individual licensing can outlive the seller and become a real closing risk.
If a business is over the SBA cap, plan the capital stack first and the purchase price second.
Why: The amount of debt you can actually raise will often determine the maximum feasible price.
Treat a seller who may stay on as a transition dependency, not as a true permanence guarantee.
Why: Ambiguous post-close involvement usually means the buyer should expect more transition work than the teaser implies.
Only pursue a carve-out strategy if you can prove the overhead and labor can be split cleanly.
Why: Shared trucks, staff, and admin can destroy the economics of separating a mixed business.
Use seller notes, equity, or earnout-like structures to bridge gaps that SBA debt cannot cover.
Why: A deal this size likely needs more than standard 10% equity and capped senior debt.
The hosts treat the listing as attractive on the surface because it combines recurring-ish maintenance work with local demand, but they quickly realize the structure is awkward: the operating lines do not map neatly to one buyer profile or one financing path. That tension becomes the episode’s core issue.
Lesson: A business can be operationally sound and still be hard to buy if its structure does not fit the capital markets.
Michael proposes buying the bundle and later selling each half to specialists, arguing that each could command a better multiple separately. Heather pushes back that shared overhead and staffing often make carve-outs much messier in practice than they look on paper.
Lesson: Carve-outs can create value, but only when the shared cost structure is simple enough to allocate credibly.