Next Thing You Know, You’re Running an Empire

Ten years ago, the Wall Street Journal reports, the owners of skilled-trade businesses had little hope of ever selling their businesses. Now, they’re “America’s new class of millionaires.”

Good Morning!

Here are today’s highlights:    

• On this week’s Dashboard podcast, Gene Marks offers some reminders about disaster prep.

• Reddit is becoming the go-to platform for organizations looking to get a message out.

• A Wall Street Journal survey asks economists about the likely impact of a Trump administration or a Harris administration.

• How one family business went from side hustle to billion-dollar sale.

PRIVATE EQUITY

The Wall Street Journal offers a glowing portrait of how PE roll-ups can set small business owners on a path to real wealth: “PE firms across the country have been scooping up home services like HVAC—that is, heating, ventilation and air conditioning—as well as plumbing and electrical companies. They hope to profit by running larger, more profitable operations. Their growth marks a major shift, taking home-services firms away from family operators by offering mom-and-pop shops seven-figure and eight-figure paydays. It is a contrast from previous generations, when more owners handed companies down to their children or employees.”

• “‘Everybody and their uncle owns an HVAC business in the private-equity space today,’ says Adam Hanover, chairman of Redwood Services. The PE-backed home-services company bought Aaron Rice’s business in 2022 and merged it with Rite Way, a larger Tucson-based HVAC operation that Redwood acquired the year before.”

• “Redwood has acquired 35 companies in the past four years. They range from smaller outfits (such as Rice’s), which Redwood says it buys outright for an average of $1 million, to more sizable companies (such as Rite Way), with an average valuation around $20 million, in which it takes majority stakes.”

• “In Rice’s case, he struggled with addiction and had spent five years in prison for selling meth before co-founding his plumbing business in 2012 with his business partner, Mike Nagal. It specialized in sewer inspections and repair. At the time that they sold the company, it had 18 employees and was bringing in about $3 million in revenue a year.”

• “‘They see what they can do on their own is a fraction of what they could if they had somebody behind them, saying, I’ll help you buy these guys and those guys,’ says [Ted Polk, a managing director at Capstone Partners], who has done deals in the skilled trades ranging from $30 million to more than $200 million. ‘Next thing you know, you’re running an empire.’” READ MORE