13 Oct Built to Sell Radio: When the Hunter Becomes the Hunted
Tom Farinacci II built Houston Green Leaf up to 35 employees when he solid it to Grounds Control, a national landscaping company, for around four times EBITDA.
Along the way, Farinacci grew by making two critical acquisitions, so he has been on both sides of a deal and brings both perspectives to this interview. Some macro themes should pop for an inspiring value builder, including:
- Pick a quiet corner: There’s nothing glamorous about cutting lawns, but in part, that is the magic of what Farinacci built. He started pushing a lawnmower at 15, and by age 45, he had built a company that was attractive to a national acquirer. Operating in the least glamorous corners of the economy are often where the most money is made. In Farinacci’s case, he was earning EBITDA margins of around 15% a year.
- Location matters: Both when Farinacci made acquisitions and when Green Leaf itself was acquired; the location was important. Farinacci bought businesses dominant in specific neighborhoods, and Green Leaf was acquired in part because they had a substantial chunk of the Houston market — a large and growing megacity.
- Humility: From a relatively young age, Farinacci had a number he wanted to sell his business for. Farinacci knew that if he could accumulate that much money, he could invest it and do what he loves, which is spending time with his kids and coaching his son’s football team. Farinacci avoided the trap of moving the yards sticks so many of us fall into when, instead of celebrating the achievement of a goal, we pick an even higher goal. Farinacci hit his number and had the discipline to sell.
There’s plenty more to take away from Farinacci’s interview, including:
- How to structure an acquisition
- How vendor financing can be used to acquire a business
- What to look for when vetting a potential acquirer
- How to pick an M&A advisor
Around 90% of Farinacci’s revenue was recurring thanks to long terms service contracts. Service contracts are one of nine subscription models you can use to transform your business from the transaction business model to an annuity business. We’ll help you discover your recurring revenue stream using The Automatic Customer Builder, the tool that underpins module 5 of The Value Builder System™. Complete module 1 right now by getting your Value Builder Score.