In this episode of Jackcquisitions, we explore profitable small business acquisition strategies with Peter De Baptiste, owner of Joe Cole Plumbing in Florida. Peter shares his entrepreneurial journey—starting in banking, then leading a delivery service startup, and ultimately acquiring a plumbing company. Now, he's setting his sights on HVAC and turf installation businesses, uncovering high-potential, under-the-radar sectors in the home services industry.
We break down the unique appeal of tier two and tier three service businesses, such as synthetic turf installation and residential HVAC. Peter and Jack discuss the financial performance, operational demands, and long-term scalability of these niche industries. Whether you're an investor or operator, this episode offers practical insight into identifying and evaluating service businesses with real growth potential.
If you’re looking to buy a service business or expand your portfolio in home services, this conversation delivers a wealth of real-world advice. Learn how to navigate smaller markets, understand what makes niche businesses attractive, and discover the lifestyle implications of owning versus operating in competitive sectors.
🚨 In This Episode, We Cover:
🔹 Peter’s Journey from Banking to Plumbing
🔹 Why He’s Targeting HVAC and Turf Businesses
🔹 Understanding Tier Two and Tier Three Opportunities
🔹 Operational Challenges in Niche Home Services
🔹 Scaling Potential vs. Lifestyle Fit
🔹 How to Evaluate Smaller, Less Competitive Businesses
💼 Special Thanks to Service Scalers!
We’ve been partnering with Service Scalers to maximize our Local Service Ads (LSAs) and optimize our Google My Business profiles, and the results have been incredible. With hundreds of thousands in sales and 900+ calls in a single week, GMBs are now our top-performing organic lead channel.
Want to learn how Service Scalers can do the same for you?
🔗Check Them Out Here
💼 Shoutout to Appletree Business Services
HVAC and plumbing pros—ditch tax surprises and unresponsive accountants. Appletree handles your books, taxes, payroll, and acquisitions, and they know tools like ServiceTitan cold.
🎁 Get a free tax & financial review or 10% off a QOE report.
👉 Book a call at appletreebusiness.com — tell Patrick Jack sent you.
🎙️ Hosts:
🗣️ Jack Carr
🗣️ Peter Debaptiste
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201 Transcript
Peter Debaptiste: [00:00:00] Talk to me real quick about your first acquisition. Why plumbing? I was a lender on the other side of the table making loans from like one to 15 million. I heard it was a thing to go buy a business, and then you said toilets, hearing that you could buy a business where like you work eight to four and that's it.
I, I just like didn't even realize. That that was a decision I was making by buying a plumbing business instead of a mar upholstery business.
Jack Carr: If you got the opportunity tomorrow for $1.5 million, oh God turf business to add onto your plumbing company, and they were selling it to you at a three x multiple of 600, are you in?
Peter Debaptiste: I am so not into that.
Jack Carr: Welcome back to Jack Acquisitions, the one and only place where you get your acquisition [00:01:00] information. Sorry guys, I'm just messing around with, uh, the intro, but today I have an awesome episode lined up. We have Teeter Peter. De Baptist. Did I butcher that? That was pretty
Peter Debaptiste: close. Most people get the first name right?
At least.
Jack Carr: Yeah, I uh, did the old switcheroo here. Peter is the owner and a recent acquirer a few years back of Joe Cole Plumbing down in Florida. How are you doing today, Peter?
Peter Debaptiste: Doing good, man. Excited to be here with a legend. Of scrappy acquisitions.
John Wilson: We just are finishing the best April we've ever had. 55% year over year.
Organic growth. Really just a huge thanks to Service Scalers for being our marketing partner in that a ton of that growth came from both paid and organic SEO efforts. We did a ton of work on our SEO with service scalers, really strategizing and working on that about a year and a half ago, and the results have been creeping up over the [00:02:00] past about year.
Really started to go crazy over the last few months as we're starting to see multiple six figures of revenue attributed to our website. And that's from their work on our SEO. On top of that, the management of paid has just been absolutely huge. Year to date, we're up 30 something percent. April alone was 55.
And, uh, we're just super grateful for service scalers in that partnership. So if you wanna learn more about how they helped us, make sure you check out service scalers.com.
Jack Carr: We, you called me a few weeks ago and that, that's why I was like, I have to get him on the podcast because we were talking about. Um, you and, and your plans in the near future to acquire another business.
Why, why do you like paying so much?
Peter Debaptiste: It's just fun. It's, uh, it's like the ultimate challenge coming into, uh, coming into an industry, you know, nothing about and figuring it out. It's just, I don't know. It's pretty, it's pretty awesome. It's a, it's a big challenge and there's obviously like the financial opportunity behind it, but I just, I just also [00:03:00] kind of like doing it.
I
Jack Carr: was gonna say like, there, there is a financial aspect there of owning a secondary vertical, right? And so when we were discussing it, you were saying, Hey, I'm in plumbing. I'm doing well in plumbing, but you know, I see this HVAC over here and it looks juicy. What, why the, the, why are you looking currently to purchase an HVAC business?
Peter Debaptiste: Uh, well I've been looking, so I bought the business coming up on three years ago. I've kind of been looking since I started, but a little bit more aggressively now that we're. I feel like we're kind of well equipped to, to add another business in, um, you know, in terms of our office running well. But in my eyes, like I'd be happy to find another plumbing company.
Um, but in my eyes, like kind of the perfect acquisition is to bring on another trade. Um, and I don't wanna start from scratch if I don't have to. So, you know, go find a, an HVAC shop that's got, you know, six trucks on the road and enough [00:04:00] spin where. Um, you know, the phones ring every day and you don't have to go and chase that from, from scratch and hire, you know, if you start it, start it from ground zero, you got one guy on the road and he's doing everything and you're trying to make sure he gets his hours and trying to make sure you're drumming up business.
So I, I like the idea of buying something existing and put 'em together and that be the way that we branch into a new trade. Um, but I'm also looking at, you know, I'd love, you know, another plumbing company as well. We got plenty of, plenty of runway left in plumbing.
Jack Carr: Yeah, no, that, that's definitely, so we had a very unique experience is that we started like from ground up and then we ran that for three months and then we bought a RA large plumbing company to tuck in.
Because you're right, it w it takes a really unique individual who can kind of self-manage, but also while they're doing that they have to help build price book. And the startup game when you're trying to start up a brand new vertical can be super difficult. Um. [00:05:00] And then once you purchase a company, you realize, oh, this is also super difficult.
But you're right, the phones are ringing day one, you're bringing in revenue at, at high rates and, or hopefully at higher rates. And, um, it, it kind of is a launching pad to really get you moving. So talk to me real quick about your first acquisition. Why plumbing? Were you tied to this geographical region?
Like just how did it come about?
Peter Debaptiste: So I grew up in South Florida. Um, I live down here. I've bounced around a little bit during my college years, but you know, this is, this is home. I got a family now. Um, and I knew I wanted to be in South Florida and, um, the whole buying a business thing kind of came about. I don't know, a couple years before I actually did it, um, I had a childhood friend move back from California and he said, Hey, I'm gonna do this thing [00:06:00] called the search fund.
I've been, you know, meeting all these people, I'm gonna go, I'm gonna go raise capital from a bunch of investors and they're gonna, you know, pay me a salary to be a one-man private equity shop. I was like, that sounds insane. What, what was that?
Jack Carr: Yep.
Peter Debaptiste: And then, you know, I kind of got the download on it and it really fit my background.
So I started my career in banking. I was, I did four years as a, as like a lower middle market lender at a bank. So basically like once you get beyond the SBA, um, that was my world. I was a lender on the other side of the table, um, making loans from like one to 15 million. Um, and then I worked at a company called Delivery Dudes.
Um, ended up running it as president. I was there for six or seven years. Um, so really got, you know, we grew the business from like 25 employees to 125. We had a thousand, uh, independent contractor drivers, like Uber drivers. Um, so it really went from like small [00:07:00] business to medium business, um, during that time and really just kind of had my, you know, felt good about the.
Or at least good enough about understanding the finance side of it and good enough about being able to manage people. So I, you know, I heard it was, I heard it was a thing to go buy a business and, uh, and then I ended up doing it.
Jack Carr: And then you said toilets? Yeah. And going home services, like, well why, why toilets?
Peter Debaptiste: So I was looking in South Florida, so I, it was a small geography. Yeah. So I had to be, you know, wide on industry. Um. But was it always home service though, at least? No, uh, it, it started off as like really wide. It was basically like everything, but like everything but restaurants. Um, you know, it was kind of like how you start and then, you know, I gravitated towards, um, towards home services or more broadly, like guys and trucks, businesses.
Um, I got pretty close to buying a, uh, a [00:08:00] mulch blowing company. So they basically operated like a, a small fleet of, they're like the size of garbage trucks and they blast in like commercial quantities of mulch for like golf courses and HOAs, and they have a bunch of municipal contracts. Um, it was a really, really interesting business and it'd be a great lifestyle business.
Um, so I got pretty close on that one. And then I just, you know, I looked at a handful like fencing, roofing, um, plumbing, hvac, electrical, um. All sort of like trades businesses. Um, and so I wasn't targeting plumbing, but I'm glad I found it. I really love it. It's a lot of fun. I learn something new every day and it's just kind of a cool, it's a cool space to be in.
Um, so
Jack Carr: that was the irony is everyone in HVAC and hvac, now that I've done hvac, plumbing and electrical, uh, we do a little bit of electrical, not, not that much, but point being is all the electricians and the HVAC guys are like, Hey, we will do anything you want, Jack. [00:09:00] Except plumbing. Yeah. 'cause there's a huge stigma right there.
It's like, Hey, I'm not gonna touch a sewer drain. Like, it's just a, not that they're below it, just like, Hey, there's a different breed of plumbers. I love plumbers. But it is, it is a different breed. And I've had to run some of those calls and, um, yeah, it's, it's as bad sometimes as they say it is. Yeah.
Peter Debaptiste: There was a great, um, tangent, but there's a big like, plumbing community on Instagram. Like Boston Plumbing monsters is this guy. And he started this whole debate last year of like drain cleaning's, not plumbing. And the whole like plumbing influencer community was like fighting about is does drain cleaning count as plumbing?
Like, are you a plumber if you clean sewers?
Jack Carr: Yeah. Right. Even the plumbers don't want it. Um, two. Funny. So let me ask you a question. Now that you've been in the business of, hey, buying businesses, you've seen a ton of businesses. How long was that search? Just real quick?
Peter Debaptiste: I did it, I think about as fast as you could do it.
Um, [00:10:00] mine was nine months, start to finish.
Jack Carr: No, that's not, I mean, that, that's a, that's a good healthy search in my, in my mind. 'cause that's around where mine was. I started and it was about seven or eight months later we closed as well. Um, or we found the business and then two months later we closed. So probably, yeah, almost a year total.
Um, but you've, you've got to see the gambit of everything from, I'm on that knowing you, that you looked at a CIM on a restaurant, just at least one. Oh, yeah. Yeah, of course. I was like, you a
Peter Debaptiste: chain.
Jack Carr: Yeah. Yeah. Mine was a breakfast joint and it was back in Napa where I lived and I was like, I, I look so good. I mean, we were looking at things from breakfast places to lumber brokers to, you know, the whole thing.
I almost bought an appliance repair business that was beautiful. I still love it. Still talk to the old owner today. Um, but that being said, now that you've [00:11:00] seen so much. How, like what is your dream business?
Peter Debaptiste: I mean, I like my business, but when I talk to people who are getting in and you know, starting to look for businesses, like my big push, there's a couple factors that people don't talk about as much and that I certainly didn't like give enough points to, and.
So like my overall, like I love pushing people to what I would call like the tier two or tier three home services businesses. Um, like fencing and roofing were at one point, like in that bucket, but now they're getting gobbled up by private equity. So all of a sudden, like fencing, which started off as a not very hot industry, is now kind of a hot industry.
Um, but like, you know, an example that, um. And I gave to somebody, I was like, I got AstroTurf put on my lawn. And [00:12:00] it was so unsophisticated getting quotes and getting people to answer the phone and getting them like people showed up and like then spent an hour and a half with me and then never sent me a quote even when I followed up.
So like the competition, the bar is still really low. You're not dealing with sophisticated people and like. I got my turf done. And like, who isn't happy after getting like, AstroTurf, like looks perfect every time it's finished, it looks flawless. Like every customer ends up happy. Um, so like that dynamic was one that I didn't really think about was like, are you dealing with upset people all day or are you dealing with happy people?
It's like dentists are like the number one suicide profession because everybody's miserable going to the dentist and like, you know, it's like you're dealing with like, people are sad to see you. So it's like kind of, you know, and in plumbing it's all emergencies. No one, it's a catch 22 because at the end of the day, like, unless you're like upgrading somebody's, you know, upgrading somebody's system, for the [00:13:00] most part, you're just taking their money to make their housework the way it did 24 hours ago.
Jack Carr: I think of us, Peter, first off, how dare you. Second off, I think of us as heroes. Heroes to people's houses. So maybe that's why I'm always so happy is 'cause we come in, you've been sitting in the heat for 24 hours. Yeah, you have to pay some money. But we come in back up and running. Happy, happy, happy. But yes, you are, you're right.
We're the, we're like the grim reapers of household appliances or household fixtures is you, you only call us when your, you know, your sewers are overflowing, your toilet isn't working, or, or your house is too hot or too cold. Yeah. And, uh. I definitely get that, but let's, let's be, talk more about this tier two, tier three, some, some examples of this because it's an interesting perspective that I know I didn't think about when I was first getting into it.
I went right for where private equity was going because I figured, hey, that's where the, the tailwinds will be. But you're saying, Hey, now that I'm in one of [00:14:00] these spaces. You are looking more at these kind of increased fragmentation. Um, there's maybe some less sophistication, less tools and so what, what, what are some great examples?
You said turf business, which is like, I would say tier one would be just commercial and residential landscaping. Right. And tier two is specifically, all you do is turf.
Peter Debaptiste: Yeah. And specifically the, you know, the guys that I was interacting with only do turf. For residential homeowners, like not new construction projects, right?
Mm-hmm. Um, and so another, like, I'll give you an example, and this is like an, an even bigger factor that I really underappreciated. So I had a, like my friend who introduced me to this space, he bought a home healthcare business a year before I did. And like, you know, his phone rings on the weekend like, Hey, hey, your nurse didn't show up.
Like, my grandma needs help. His business is 24 7. Plumbing is 24 7, [00:15:00] like mm-hmm. I've got a lot of people, so thankfully I'm a little bit less 24 7 than I was when I started, but like it is all emergencies all the time. And then a year after me, a third friend of ours bought a. Marine canvas business. So he makes like tee tops and reupholster cushions for boats.
Yeah. And that, it was a really small one. It was like, you know, people talk about buying a job, like he was buying a job. It had like one and a half employees. Um, but after a little while I was like talking to him and I was like, oh, hey. So like, what do you do? You know, what do you do for after hours stuff?
And he is like, what are you talking about? Like, well, what, like. He is like, my day ends at four o'clock. He's like, there is no problem that anyone has desire to have handled after hours. He's like, I go in and I leave and no one's complaining if their thing is delayed by day. Like, and it just [00:16:00] blew me away.
'cause I was like in the business for so long, working so many hours and I was like, what do you mean your phone doesn't ring at 8:00 PM on Friday night? And he's just like, yeah, like it is just a low stress business. Like everybody's chill. Yeah. And it blew me away, like, what do you mean there are no emergencies?
So I think like that is one that definitely isn't, everybody says like, you know, shadow the owner for a day, like get to know and like I knew that the guys I was buying from worked a lot, but man, I just like hearing that you could buy a business where like you work eight to four and that's it. I, I just like didn't even realize that, that that was a decision I was making by buying a plumbing business instead of a marine upholstery business.
Jack Carr: I think that that actually, right, that's an entire industry that I think fits your, your theory of these tier two, tier three businesses really, really well is when you go and you look at. Canvas businesses, [00:17:00] right? Where homeowners are putting up shade structures or, or playgrounds are putting up shade structures.
It's this really niche market. Even businesses, right? Restaurants, they want the shade on the front or the shade on their back patio. I could see that there's a, would maybe be a small emergency service component, but it's nowhere near what you would see in kind of a home service business. Um, I remember looking at a few of those.
The numbers are great. Um, as well as I, I also looked at a marine canvassing business, uh, in the Gulf, um, a long, long time ago, but they focused more on, uh, sale repair. So they would, they would do sales and repair on sales. And I, I always just imagine you rip a sale, you buy a new one, but obviously they're so expensive that, um, they go through and they, they stitch 'em up and make 'em look nice and everything.
So really interesting businesses and I think that, that those transcend, um. Outside of those kind of quirky ones too. 'cause like, I, I, I view that and we've been trying to do [00:18:00] something like that in our business from a startup perspective. We tried to buy a tier two recently, but the guy wanted way too much.
Um, but, but I look at that. We have one locally called the Hot water heater Pros. And you might love that because there's no such thing as a hot water heater. It's just a water heater. The hot is a unnecessary word, but from an SEO perspective, the guy knew what he was doing.
Peter Debaptiste: That's all. That's hilarious because every is like, all they do, that guy doesn't know his stuff and he's over there just, who
Jack Carr: cares?
Yeah. But from a tier two perspective, all he does is water heater, low margin, high volume. They focused all on, um. Marketing, uh, and it's all brand marketing because like you need a hot, a hot water heater, you go to the hot water heater. Pros. You don't call a plumber, you call them. And, um, they do decently well in our area and, uh, they don't have to spend very much money at all on marketing, which is extremely nice.
And from a water [00:19:00] heater perspective, I, I've seen that more often than not as people. Um, I heard an ad from Southern California the other day on my Pandora, which was the Re-Pipe Boys or something like that. All they do is that, like, it feels like the industry, these tier twos are like, they're segmenting out basements or hot water heaters or now I'm, I'm gonna say I'm gonna get in trouble or re pipes or just like this single industry, um, or single, uh, skew, if you will.
And turning it into like their only business. And it's only the, the high value tickets.
Peter Debaptiste: Yeah. There's a guy by us who does pretty much exclusively tunneling, like sewer replacement by tunneling. And he, he does it himself. There's like a plumbing company, but a lot of what he does is like subbed out from other, other plumbing shops to the point where he like got rid of the name plumbing on all of his trucks.
And now it just says tunneling.
Jack Carr: Yeah,
Peter Debaptiste: like Bob's tunneling. [00:20:00] Um, I. I don't know if I, if I would love to be in that business, but, um, but it kind of follows that same thing, like, yeah, you find your little thing and you're not in like, you know, a multi-billion dollar total addressable market. But talk about, you know, having your lifestyle business and there's a lot of, a lot of weird ways to get there.
Jack Carr: What's the downside of, of buying a tier two though? I mean, I have something in mind, but I'm curious what you think the downside would be. I.
Peter Debaptiste: I think the, the downside is scale. You can only get so big. And the downside is exit opportunities. Because if you don't have scale, who wants to buy it for a crazy multiple?
HVAC is enormous. It's fragmented, it has like recurring revenue components, all this stuff. It checks a lot of boxes. Um, so like, yeah, people are gonna go and pay double digit EBITDA multiples for it and. Because you can grow it so big and you can grow it through, you know, crazy acquisition [00:21:00] strategies. If you go find like the mulch blowing company or the Mar upholstery company or whatever, like, yeah, you can, you can turn one of those into a $10 million business.
But like not a hundred.
Jack Carr: Yeah, definitely. Scale is an issue, uh, especially for single sku, right? Like American leak detectors actually is a great example of this. They had one of those fragmented tier two and that was their thing. They would do leak detection for plumbing companies and it went super well, right?
Uh, they grew a huge brand, national brand, and then they got. They had to scale. And so what did they do? They went and said, Hey, not only are we gonna do leak detection, but now we're gonna do plumbing too. And so what happened to them is a very interesting case study is they. Got wiped out. Like we were talking to one of the, their main sales reps the other day and he was saying, yeah, it's, it's got really bad at some point because as they tried to scale this tier two into a tier one, again, by doing tier one items, [00:22:00] they lost their entire customer base.
Right. Because I'm not, as a plumber, I'm not gonna give them my work. They're gonna undercut me. Right. They're gonna find the leak. They're already there. They're just going to sell the fix. I like, I'm not gonna call them anymore. And so you, you find that, I think scale is a huge one. The other one that I, that I have in mind, um, that becomes an issue really early on is you can get crushed, absolutely crushed by large competitors like the tier one.
Large competitors, they have the resources because they're, they have scale, so they have, you know, their marketing dollars could equal your top line revenue. And so, right. If you, the mulch blowing business, for example, if you had a tier one ginormous landscaping company that owned South Florida, theoretically they could go and say, Hey, we're doing mulch blowing now, and we're gonna dump a ton of resources into this.
Couple hundred thousand and now we are [00:23:00] going to steal those contracts away from you and we are gonna be the new HOA owners. So it's an interesting dichotomy of, of it's good. But if it, if I feel like if, if it gets too popular Right. Someone's gonna come in and try to sweep it out from under you. Yeah.
Same with turf blowing.
Peter Debaptiste: If you succeed
Jack Carr: or turf installing, you'll start
Peter Debaptiste: attracting more eyeballs to,
Jack Carr: right. Yeah. It's like you just wanna fly under the radar as a lifestyle business for years and years. Yeah. Um, I mean,
Peter Debaptiste: but the reality is like, look, look around. Like, I don't know. Most of these guys have been doing it for decades.
Yep. And don't seem to be going anywhere. Yeah. I say that, but I went that exact thing at, you know, at delivery dudes. We were a competitor with Uber Eats and DoorDash and like, you know, we were, you know, out competed by people a thousand times our size. So that was fun. I wouldn't, I wouldn't wanna do that again.
Yeah, exactly. That was part of the, that was one of my fears about plumbing was like, hey, the, you know, there's like this [00:24:00] big, there's this big wave in the industry and like, are we on the, you know, which, which part of the wave are we on? Are we about to be on the good part of the wave or are we about to be on the bad part of the wave?
'cause at my last business, we missed the wave. We were on the bad part of the wave, and it was super not fun for a while.
Jack Carr: Yeah, I mean, I, I think the waves are different though when it comes to home service industries, right? Yeah. They, they had like the same boom in the 1990s, uh, where PE came in, they grew big and crashed and like, and they took 20 years for the valuations to go ridiculous again.
But all that being said, I mean, in that same time period. We had multiple, a hundred million dollar businesses being formed and like this giant influx into the industry because it's not going anywhere. I don't, I don't view this as an uber able, I think you were talking about that. I was speaking with you offline about it.
Just, it's so hard and Uber barely made it right that
Peter Debaptiste: that was somebody else. So that was a very, that [00:25:00] was a great comment. Oh, who was that? Uzi. Yeah. He was like, okay, time. Somebody talks about being the Uber of X. He's like, Uber was the Uber of Uber
Jack Carr: and they barely made it. They barely made it. Not to mention, yeah, not high skilled labor.
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Listeners of the show can get a free tax and financial review, and if you're buying a [00:26:00] business, they'll give you 10% off quality of earnings. Just head on over to AppleTree business.com. Talk to Patrick. Click the link, let them know Jack sends you and they will take care of you. Well, I have actually an old CIM speaking of being on the market and looking at cims for a long time that I'm out of my NDA on and I can talk about.
So, um, turf businesses, man, I'm excited to actually look at one in real time.
Peter Debaptiste: I have, I have, I've never looked at one. I just liked the experience of getting my turf in and I was like, alright, this.
Jack Carr: I, I don't know if you've ever heard of some of my, my older podcasts, but dude, I like, my, my version of of turf is I just wanted to drill wells.
Like I was a well driller 'cause I was in California at the height of oh eight when it was like the biggest drought and there was wells going in all over California, like, and it was just this giant gold rush. And I, and [00:27:00] me and my buddy were gonna buy a, a rig and just start drilling wells and, uh, we never did.
He ended up getting his master's degree and then went and drilled wells and I went off and did some facilities maintenance and worked in wineries. So much better choice on my end. Uh, but still, like that's my, that's my turf. And that's why I was like, like asking people, was there a boom and bust in the well business?
Huge. Huge. 'cause the minute that the, um. The minute that the, it rained in California again, which was like circle around like 20 10, 20 11 I think it was, was when it finally got a huge, huge storm that filled up all the aquifers and, and everything like that. But California has some really interesting agricultural laws around well drilling where they.
They really don't have a huge permitting process, and the, the depths that you find water are extremely deep, so it's very, very lucrative. Um, especially in the Central Valley where they're drilling like freaking, you know, 24 inch diameter wells and it's like [00:28:00] ridiculous amounts per foot and you have to go down a thousand feet, whereas like Tennessee now, if I wanted to drill a well.
I can go like over here, it's like 12 feet, like the water table's. Not very, maybe a hundred, I don't know, but not very low comparatively. That's Wow.
Peter Debaptiste: That's like some serious blue collar work. Yeah. Like what are the HVAC is like the white collar of blue collar. I. Is it? Yeah, that's, that sounds like the blue collar of blue collar.
Jack Carr: Yeah, it definitely was. But you know, as like a 20-year-old right. That it was me and my buddy and we were hard workers and, and like we always went to the gym together. We're like, yeah, let's just go put some pipe in the ground and like, we'll do all the welding ourselves. And so, I mean, it was exciting stuff at the time.
And, uh, we, we ra we raised the, well, we had a, we didn't raise it 'cause it didn't hit the account, but we had. People who are willing to move forward with it if we were going to, but he backed out last minute, went and got his MBA 'cause he was worried about being a blue collar boy.
Peter Debaptiste: [00:29:00] So, all right. So like that is just, to me, that's like the number one statement I have of this whole thing is like, you can just do whatever you want.
Like, and that's, oh yeah, that's the thing that like didn't really, you know, like took a minute to click, like after I bought the business. I like kind of went and rewind it in my head and I was like, what just happened? Like how did I just buy a business? I think when I closed, we had like 32 employees. I'm like, I know nothing about plumbing, and I did not put in much of my own money.
I'm like, somebody was willing, like the grownups at a bank were willing to like, let me do this. Like is it, it felt like I should have been asking somebody permission. But instead it was just like, I decided I was gonna do it and I did it. And that's just like exactly what you're talking about with the well, like you were just, you were just gonna do it.
Like, yeah. Have you ever drilled a well before? Nope.[00:30:00]
Jack Carr: Beautiful. But, uh, yeah. You know, that's what it is, man. That's, that's the fun part about life, right? Is you can just go out and do things and. Sometimes it works and sometimes it doesn't. But awesome. So this, I'm not gonna say names, I'm pretty sure it's probably already closed already, but this turf business, artificial turf business out of Florida, I picked one outta Florida for my boy, Peter here, so that if you want to go close on this later, you can, except this probably already closed, um, 60% residential, which, you know, that's what your experience was.
But of course, with turf and with almost all home service businesses, there can be. A commercial aspect to it, right? Sometimes even an industrial aspect. Uh, you look at roofs, you could do, you know, you could do residential roofs, but you could also do commercial roofs. Vastly different companies. Same with hvac.
You could do residential hvac, you can do commercial or industrial hvac, vastly different products. And so this is [00:31:00] interesting. They do 60% residential. And then they did 15% commercial, which looks like office complexes, public areas, and rooftop gardens. So rooftop gardens was, was pretty interesting to me. I didn't realize that was such a, a market, but it kind of makes sense if you were closer to, you know, the Miami area or, um, you know, where all the condominiums are, that that would be a thing, especially for dogs, right?
Yeah, like dogs. If you live in a condo, have a dog, you know? And then the last 25% was stadiums, golf courses and schools, which is cool. So really, really big mix of commercial, kind of sports oriented and then residential. Um,
Peter Debaptiste: that's interesting that it's such a small piece. 'cause I would guess the dollar amounts on that are huge.
If you're doing like a, a football field mm-hmm. Or whatever, you know, I'm guessing that's like if you're doing a school or a stadium, like [00:32:00] that's gonna be like huge dollar amount, huge dollar amount, low margin.
Jack Carr: My guess though is like how many houses are there in comparison to schools that are putting in turf?
Sure. Right. So you might get one or two a year. Maybe five, well, five or 10 a year, but you're doing at the same time, hundreds of houses. So even though it's 25% of the market, I bet it's a really small, um, like actual customer concentration. It's probably the, you know, three or four customers. They're probably GCs that, that you're building schools with them.
Right. So, super interesting. I found that that kind of beyond just the residential, um. Push. I found that to be really interesting. Um, they were, let me see, I wanna say 800 in top line revenue. Oh, geez. That's a real 800. Yeah, that's a real, it's a job. Yeah. [00:33:00] Oh, no, sorry. 1.5. 1.5 in top line. 40% gross margin, which also surprised me.
Uh, and about 10 to 15, 10 to 14% in ebitda. So gross margin surprised me. EBITDA is, is kind of in line with any home service industry. Um, so that one actually didn't.
Peter Debaptiste: Well, that's interesting because if you're making 40% gross margin, I wonder if that, if that's after labor. Like, what are your other expenses other than yourself?
Jack Carr: My guess is a big portion of it's still marketing. Um, they do a lot of Facebook marketing. That's, that was what I was told when I was working with them is like Facebook was the key driver more so than Google, more than LSA. And I found that to be really surprising. Um. But it makes sense 'cause it's such a visual product, right?
Like you said, you don't, you, you walk out and you're like, oh, I'm really happy. 'cause it's so clean and nice and it always stays [00:34:00] clean and nice. But that's a, you know what I mean? It's like a visual aspect to something that,
Peter Debaptiste: um, yeah, you want, yeah. You see the pretty picture of it and you're like, mm-hmm.
That's, yeah. You can't, I mean, yeah, if you're, if you're searching for it, you're searching for it. But yeah, I'm sure there's a little bit of the like, uh. I'm sure there's a marketing term for it, like building the desire.
Jack Carr: Mm-hmm.
Peter Debaptiste: But yeah, I mean that's 1.5 million is, you know, scary territory. I don't think you're gonna find too many that are, that are bigger than that at the same time.
Jack Carr: Well, that's exactly what I was just gonna say is I went before we did this episode and I, so. Uh, to ruin the fourth wall into, to everybody who's listening's, uh, idea of what we do on this show. We, we knew we were gonna talk about a turf company prior, but, uh, I went on Biz Buy Sell, and I looked at a few of these too.
And, um, yeah, there were, there weren't, there was like one that was bigger than this [00:35:00] one, and it was Dallas, 4.5 million still for sale. Um, but the rest were all like a million. And that seems to be for these like tier two, tier three businesses really, where they kind of cap out. Mm-hmm. So, interesting. Um, lemme see.
The other thing I found interesting in this is, I mean, in terms of like labor and just the, the entirety, it's all the same as hvac. So it's, it's so confusing to me that how similar it can be in terms of like. Right top line at 1.5. Labor is the same percentage. I think they get hit pretty hard on their cogs with, um, material though.
Yeah, because every job is a heavy material load and then I'm sure there's some excavation and drains and, and quite a bit there too.
Peter Debaptiste: Yeah, there's definitely, um, yeah. All, lemme ask you, all these businesses [00:36:00] fall into these same like, size buckets. Mm-hmm. Like there's just a ton of them. Like this million and a half size is one size bucket.
The like can't break. 3 million is the other bucket. And then like sometimes you get, you know, a little bit bigger than that, but I feel like those are like the big thresholds. 'cause like you can run the $1.5 million business with you kind of being the only person like. You're the center of the universe.
You at that size, like you can still do the books, you can quote every job, you can manage every, you know, call gone wrong, all that stuff. The difference with the, um, the turf kind of thing is you're probably not dealing with at one and a half million. I don't know, we gotta do some math here, but like, I'm guessing that's probably like, you're running like two crews or something.
Like you're probably doing like two installs a day. [00:37:00] So it's not like you're dealing with a field of service techs and each one's hitting all these different jobs. I'm guessing your day's like kind of steady and predictable. Like you wake up, you set up job number one, you got a lead guy on job number two, and you're quoting three jobs in between, and then you go check in in the afternoon and make sure the customer's happy.
Um, e exactly. I'm, I'm, that's what I was gonna ask you. How long did yours
Jack Carr: take and how big was it?
Peter Debaptiste: What was it?
Jack Carr: How long did your, your specific job take? Can you talk a little bit about the one that you got and for your house, how many people were there? Did they show up in branded trucks? Like, that's what I'm curious about because I bet much like you, you know how like roofing, most roofing companies, they don't have their own installers, like anyone who's installing your roof not, doesn't work for the company.
It is a different subcontracted crew. And they usually have a project manager who stands on site and manages. So I'm curious. I bet they would. I mean, I could see something running similar in this [00:38:00] industry, but then if it was like landscaping, I could also see them just being W2 employees. So I, I'm not a hundred percent.
My
Peter Debaptiste: project was. What was your experience? We did like a little, um, we did like half of our backyard, um, I'm trying to think of the square footage, but like, it was small. It was like. I think it was less than a thousand square feet. Um, and I don't think they had branded trucks like, you know, it was a decent brand.
Um, you know, like professional looking stuff. Um, I think that, I don't think it came through on like a house call Pro or any, any type of software, but it was like, you know, professional looking business cards and stuff. Um, I don't think anybody had remotely. Sophisticated apps or anything like that? Nope.
Can add, did they turn around an iPad and say, Hey, or here's your options. But I did a fence job. I'll tell you about those that went like that. Um, but the turf thing, [00:39:00] I don't think they had branded trucks or anything like that. And it was just like six dudes one day, like just full for like six dudes working like 11 hours.
Hammered it out. You know, it was pretty impressive.
Jack Carr: That is, that's a lot. I was expecting more of like a two man crew to knock that out, but 10, I guess have to rip out all the grass. Did they have to drive an excavator or some kind of mini backhoe or something like that? To, to No, I don't think clear the ground.
It was
Peter Debaptiste: big enough and the grass was already removed. Okay. Um, but now I'm, yeah. Now I'm wondering, are we gonna do some unit economics on this? Well, that's what I'm trying to figure out. Right, because they didn't have it, it wasn't six guys there the whole time, but it was there in the beginning, like they were getting it like cleared out.
Maybe some of 'em went to do something else after.
Jack Carr: Well, like you said, I wouldn't be surprised if they're running two crews and then just like an HVAC or just like in plumbing you do have like a crew is not [00:40:00] consistent of all equal people. Some of 'em are better at, you know, tear out demo. Um. Rough in finish work.
And so I'm wondering, like, I need to dig into this more. I'm wondering if the, uh, the turf business has a rough in a tear out and a finish crew that comes in and uh, really keeps it nice. I'll have to Yeah. To talk to a supplier.
Peter Debaptiste: No, they, they might, I'm sure. 'cause like the demo work, you know, is probably, you know, you're probably demoing and grading with a machine.
Especially like, again, my, my project was small, but my project, so it was about a thousand square feet, and I think it was about 6,000 bucks. And so I just did 60 hours of labor at 20 bucks an hour, and that's 1200 bucks, so it's exactly 20% labor cost. And then your material cost is probably another, what, 30%.
And that gets you to a 50% residential margin. Mm-hmm. That's, that's probably what they're doing. Right. You're probably doing like a 50. Maybe 55% residential [00:41:00] margin. And then the commercial stuff is probably, you know, 40. Yeah. And probably equal. It
Jack Carr: pulls you down 35 to 38 and pulls you down. 'cause it, it's a high ticket on a blended.
Yeah, it super interesting. So the big question, if you got the opportunity tomorrow for $1.5 million, oh God turf business to add onto your plumbing company. W that did 40% margins at 14% ebitda. So 210 K and they were selling it to you at a three x multiple of 600.
Peter Debaptiste: Are you in? I am so not into that. I like it's, but someone is, this is like a good exercise though.
'cause like I'm a little bit of a hypocrite here. 'cause I also preach big time like. Buy lots of revenue. Like [00:42:00] sure, EBITDA is great, but like buy lots of revenue, right? Um, and I think that is one of those things where like if you have 1.5 million of revenue, like you just have no wiggle room to do anything.
But I say that at the exact same time as I encourage people to like look at oddball small stuff where you could come in and just work really hard. And it's almost like a blend of a startup. Like if you go buy this business for, you know, 500 grand or something, like, that's not like life ruining money. If something goes wrong, you're buying it a low multiple and like, so you can just kinda like throw your energy at it and a little bit of like bootstrap a, a startup energy and you could turn this one and a half million into something serious.
Um. So, I don't know. I kind of like wear both hats on that.
Jack Carr: Yeah. My problem is for, for 1.5 million though, it ha the EBITDA margin is too low for me. So at 14%, like that's a lot of [00:43:00] top, or that's a lot of expenses that are hitting the bottom line, which I'm having trouble accounting for because at a 1.5 valuation Right, or 1.5 in top line, like realistically, you're, you're.
EBITDA or your SDE should be a little bit higher unless you, you really did have all the systems in place and you know, you're paying quote, unquote for the service titan of turf and you know what I mean? So there's not much room with 240 in EBITDA to if something goes wrong or a downturn or if you wanna replace your yourself with an operator or you want to do any of these growth activities.
Like it really is scrappy. Yeah.
Peter Debaptiste: But that's why, like you, you can't pay three x for that. Yeah,
Jack Carr: you gotta
Peter Debaptiste: pay like
Jack Carr: one and a half to two. Unless you own a landscaping business and it's a tuck in, then go for it. There you go. Um, alright. The question I used to ask John when we used to do these that I loved, it's one of my favorite questions is on a one to 10 scale, one [00:44:00] being a super easy business to operate and 10 being plumbing.
No, I'm just kidding. 10. 10 being like a really difficult business. How hard do you think it would be for somebody. Like if you bought this business before you bought the plumbing business, how hard do you, do you think this business would be to run successfully?
Peter Debaptiste: I, I don't know if it's like a grass is always greener thing, but I think like this and this, like this falls into like this category.
Like there's not that much going on in AstroTurf compared to HVAC and plumbing, right? Like there's no engineering happening, like, you know, so I gotta imagine like if. Plumbing and HVAC is like a seven outta 10. This has gotta be like a three or four. 'cause I think you can, and here's why I say that. I think landscaping's probably pretty hard because the labor pool is brutal.
I think with this, because it's project based and it's higher ticket, I think you can get away with paying people more. [00:45:00] Um, or if you do like a, you know, say like performance pay model for installers that a lot of people are doing in, in our industry, like I think. That's my hunch is you can get like good talent and pay them well because you're doing high ticket sales versus landscaping.
You're doing like mow and blow bottom barrel pricing. That's all your recurring stuff. So you gotta hire guys for like minimum wage. Um, I think you can get like decent talent is my hunch. And I think like your day to day is just kind of like. You set up a job, you quote another job, you wrap up the job.
Now, I think your day to day might be more than an eight hour day every day. Um, that part might be different than the canvas business. I'm guessing you're working like six 30 to five 30 every day. Um, right. You're always gonna be starting before your cruise. You're always gonna be finishing after they wrap up.
But I don't, it just doesn't seem like there's that much complexity to it.
Jack Carr: Yeah, I [00:46:00] put it at medium competition, right? Not very hard competition, but I, I don't say, I don't think it's the easiest of competition. I think that there is some competition from hardscape companies or landscape companies that do this.
Like there is competition. It's not the pe, you know, top tier marking every keyword up to $600 to pay for each keyword. Difficult, but it's definitely something so medium on competition, medium on, um, labor pool. 'cause like you said, they, they are a step above in skilled labor than just somebody who's doing blow and go.
So that in, in itself makes it harder to find. But I don't think it is. Hey, these guys are doing like really large excavation jobs or even hardscaping jobs where they're moving rocks around and planting trees and doing irrigation and doing lighting. Like this is just turf. Um, so I think that's somewhere in the middle too.
And [00:47:00] then I love that it has a high price, high ticket, which can, you know, you can do a lot with a high ticket point. Um, especially for all jobs, I'm sure there's a smaller service aspect where you go back and repair, uh, some, you know, fix, put new media down inside the grasses or inside the fake grass. Um, so that's definitely part of it.
Um, but yeah, I'm going somewhere in the middle, like 4.5 to five on this one as well. I think that, that it's, it's not gonna be the easiest in the world, but it's, it's not the hardest either. Um, good lifestyle business, if, uh, you're young especially and you wanna hustle and build something, I think that that's right up the alley.
Like you said, 500 thousand's not gonna end your life. Um, if it goes under, especially if you have a bunch of trucks and stuff, I mean, they'll liquidate and it'll suck. But yeah, that, that's where I'm sitting.
Peter Debaptiste: And I think if you come into it and you're, you just copy the, like home services playbook in terms of advertising, in terms of answering the phone, in terms of [00:48:00] outbounding, in terms of giving options in front of the customer and pricing live.
Um, 'cause I went through the same thing with like, I had a little fence project and I had. The, the full experience, you call four people, three of 'em show up, two of 'em give you quotes, even though you follow up nonstop with the third one, never gives you a quote. Um, but the one guy who gave me a quote like, did it on the iPad, priced it live, gave me three options with financing and pictures of what I was getting.
And it was like the same price as everybody else. And like the other guy, literally like the guy came to my house, spent an hour and a half with me. Then I followed up with him three times over the course of 10 days. He never sent me a quote, like, I don't know how that guy's in business. Um, but like if you take that mentality and you put that on turf, like you're gonna close more than everybody else and you're gonna be able to spend more on leads than everybody else.
And I think that's like the secret sauce. Like there is a playbook already for [00:49:00] this. You just need to.
Jack Carr: You
Peter Debaptiste: need to,
Jack Carr: and that's for most tier two businesses. Like you said, fencing has become tier one, roofing has become tier one. They're all taking the same playbook and they're all starting to run with it.
Very interesting. Awesome. So
Peter Debaptiste: today, what is, what business have you found? That's, like I said, a three. Three's not fair. It's probably a five. What business is actually like a three or lower?
Jack Carr: I think the three or lower businesses tend to be, they're generally not in home services. Um, but I think somewhere along the lines of, if you were a very, very personable person and you were to get into something like.
Lumber brokers being a lumber broker, um, that is a very simple business, right? It it's based on relationships and it's based on you're middleman, who you're sourcing, you know, specific types of [00:50:00] lumber and specific pre-cut material, and then you're, you're matching it up with builders. And that's who you're selling it to.
And so if you have both of these relationships or you can buy both of these relationships and you're very, very friendly, outgoing, networky type, I think you can do really, really well there. Um, and it's not overly difficult. The guy who I was interviewing for, he went into work at, he said between nine or 10, he had an assistant who did mostly everything for him.
He had these relationships over 30 year period. So he didn't, he wasn't going out looking for more business. He was just ensuring that, you know, the yellow Pine that he bought got to the builder that wanted it at the time. And like he had a really interesting niche market where he would sell pre-cut, uh, the, like the stair steps.
Um, I don't even know what that's called, but what, where the, the stairs go on. Yeah. Oh,
Peter Debaptiste: stringers.
Jack Carr: And so he. Yeah, he sold a lot of those [00:51:00] precut and he sold 'em to manufacturer, from manufacturer to, uh, home, home builders. Um, and so we had a huge Rolodex of these people. He had them calling him to get the wood, and then he would just call out as a middleman to the, the, the.
The, um, suppliers give them that and he'd leave at one, go to the gym and then go home every day. So he was like nine, 10:00 AM to one every day. And there was no overhead. That's what I was like, this is wild. Like the overhead was his phone and his car. Yeah. And it was like the weirdest add-backs. His gym membership, probably e
Peter Debaptiste: every other person in that industry is so stressed, right?
Like. The manufacturer is stressed. The lumber producer is stressed. The builder is stressed, and then this guy's in the middle. Just like, I don't have any inventory. I don't have any contracts. I don't have any. Right. Yeah.
Jack Carr: It's like, sorry, I, there, there's no, no, there's no wood right now. Like it's not my fault.
Yeah. [00:52:00] Yeah. There's no. That's why. Yeah. And 'cause I was talking to him too close to after 2020 where like there was that big housing boom as well and all like the material from China was scarce and all, all the material in was scarce. Just in general housing material. So, I mean, maybe a time and a place, but also I think being a middleman in like the right business at the right time and the right place makes it for a really relaxed, um.
Easy business. Yeah.
Peter Debaptiste: It also sounds like there were a lot of, uh, ones and zeros that were government service providers that we're learning about now, so that sounds like that was the secret about Yeah. Right. A few years ago.
Jack Carr: Ugh. Well. Thank you Peter, for coming on today. I really appreciate it. It was super interesting learning your perspective on, you know, tier two, tier three businesses and why you think that they are optimal for buyers and have a lot of [00:53:00] opportunity moving into the future.
And, uh, awesome breakdown of a turf business. I, I agree with you. I think that it would be. A great business for either a tuck-in or somebody who's willing to hustle and figure out how to implement the home service playbook into it. Um, if you like what you heard today, leave us a five star review wherever you listen, and head on over to owned and operated.com to get some more information.
Appreciate it guys.
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