Riding the Silver Tsunami to Multi-Business Ownership
The seeds for building out from one company to acquiring more were there from the beginning
Nick Haschka had always been entrepreneurial, but he didn’t feel at home within the standard “sexy” Silicon Valley startup culture.
He leveraged good timing, an excellent understanding of business, and a strong job market to take the leap into acquisition entrepreneurship in 2017, then grew that into 9 more acquisitions.
And he’s never looked back.
When Joining the Corporate World Doesn’t Pan Out
The Minnesota native initially took the traditional route into the world of business. He got a management science degree at MIT, went into consulting, then the Fortune 500 world, and eventually a Bay Area startup, like many of his peers.
However, in 2017 the startup he was working on wasn’t doing well. This was distracting him from more important life concerns, giving him only instability in return.
“I found myself with a one-year-old, a job that was all-consuming, and a startup company that was collapsing under my feet abruptly... Basically, we failed to raise a Series B [funding],” Nick recalled.
He and a friend — who went on to become his business partner — were both in that boat of facing unemployment and not knowing their next step. They knew they wanted to work together but weren’t interested in another risky startup with what Nick called “a 1 in 100 chance of success”.
So, they came up with the idea of buying an existing business instead of starting a new one. They were drawn to the fact that an existing company had already been ‘de-risked’. It had made it out of the startup phase and was, at the very least, running profitably and sustaining itself.
They began looking, browsing BizBuySell, and narrowing down their desired business type and structure.
Since the job market was in great shape at the time, it was a well-calculated and relatively low-risk shift for Nick. He knew that if acquiring a solid business didn’t work out, he could easily find another job working for someone else to meet his family’s financial needs.
Finding the Gem on BizBuySell
A few weeks into their search, they stumbled on The Wright Gardener on BizBuySell. This was a company that provided a visible but often-ignored service to Bay Area businesses: supplying and maintaining office plants.
Right away, Nick saw tons of pros and opportunities.
“It really just fit the pattern of everything we were looking for,” Nick said.
“A business that is relatively simple and straightforward, comfortable operating hours that could be compatible with Monday through Friday, 9-to-5, no real emergencies, no real after-hours requirements.”
Nick liked other aspects of the business, too, including that it was a field service business, which went out to clients instead of the other way around. It meant the company didn’t have to maintain a brick-and-mortar location of its own. Plus, Nick knew from experience that field service-based businesses often had efficiency problems. He knew he’d be able to fix these and improve profitability.
The industry itself seemed safe, as plant services are usually among the least costly items on an office’s budget, which means they’re less likely to be on the chopping block in tough times. The indoor plant services market was also fragmented, with no clear market leader, so Nick saw lots of potential to scale The Wright Gardener.
“Until I have every floor of every building in San Francisco, I'm subscale,” Nick explained. “And I will always be able to do better.”
He and his partner approached the seller, a former Kindergarten teacher who’d run the plant business for three decades and was retiring. The original owner was part of the “Silver Tsunami” of aging Baby Boomers who were beginning to exit the workforce.
The Details and the Deal Structure
The Wright Gardener had a regional focus, with a sizable footprint in downtown San Francisco, a smaller one in the East Bay, and very little in the very competitive South Bay (where the largest tech campuses and therefore large plant services competitors were).
They had a team of 12 and around 200 customers, most of whom were on a monthly recurring service and payment plan. Their annual revenue was between $1 and $2 million, with a roughly 25% profit margin.
The management structure of The Wright Gardener was also appealing; it had a layer of middle management that many smaller owner-operated plant businesses often lacked.
When it came to the deal, Nick and his team structured it as a standard SBA 7a loan, offering a 3x multiple of the seller’s discretionary earnings.
They financed about 65% through the SBA loan, 20% through Nick and his partner’s own capital, and the other 15% in seller financing. That last piece was to appease the SBA and make the deal go more smoothly.
“The SBA, and many SBA lenders, just won't do it without it. They want to see some skin in the game from the seller. It's sort of a vote of confidence,” Nick said.
Building a Horticulture “Empire”?
The seeds for building out from one company to acquiring more were there from the beginning, but Nick joked that his subsequent acquisitions weren’t part of “a highly engineered plan to world domination.”
Simply put, Nick and his partner felt if they could take an existing company, run it well and strategically grow its profits, they’d most likely want to repeat the process with another company.
“We’ve pursued continuous improvement and what I would call the ‘adjacent possible’ throughout the entire course of this journey. And we pursued it almost like our first acquisition was our minimum viable product, in software parlance,” Nick explained.
Nick’s second acquisition came just four months later, by way of a referral from the SBA loan banker who helped Nick close the Wright Gardener deal.
The tightness of that timeline was uncomfortable but became an opportunity for Nick and his team to accelerate how they were executing on The Wright Gardener. Instead of waiting and making changes slowly, they were forced to speed up improvements and organization in order to be able to devote some focus to the second business.
It also let Nick and his partner see the greater opportunity of buying even more businesses that industry owners in their 60s and 70s were looking to exit.
“It was happening quick, because they all knew each other,” Nick said of the movement he started to see in the plant service space in his area.
As owners looked to leave their businesses for retirement, Nick was well positioned to take over more of the market by already being in the industry.
Making the Most of Good Timing and Making New Connections
Part of how Nick was able to expand his business to include 10 companies in 5 years was, and continues to be, list building and outreach. He built a list early on of others in the space and wasn’t shy about connecting with them.
“I still find plant companies I've never heard of every time I spend concerted effort trying to find more plant companies,” Nick said.
When that happens, Nick continues to reach out and introduce himself to the owner. He uses a soft touch, not immediately speculating or going in with an offer. He simply tries to connect with them as a colleague in the business, offers mutual help in sourcing materials and potentially sharing clients.
“And as long as they're older than me, which is basically everybody, we’ll probably get a chance to take a look [at the business, as potential buyers],” Nick summarized.
The Many Upsides of Buying Small
Another part of Nick’s strategy has been aiming for smaller businesses — “buying small” — ones that fall below the threshold that lower middle market private equity firms were looking at and rapidly acquiring, then working to stack those into a big enough business to fit the lower middle market description.
In practical terms, it meant going for $1.5 - $2 million acquisitions, which would afford them six-figure salaries comparable to what they would earn at a Silicon Valley company. Then they grow that business, slowly but surely, and move on to purchase another and another on a similar scale.
That’s where really knowing his ambitions, which he recommends other searchers consider as well, came into play. Nick advises buyers to think about what they want to do with, and get from, the businesses they’re buying.
For example, Nick knew he was “buying a job” when he acquired The Wright Gardener, and that meant he had to be very clear on the kind of day-to-day he wanted to have, the kind of work he wanted to be involved in after having worked for much more aggressive and fast-moving ventures.
“You can do the very incremental approach. You don't have to go try to create overnight success,” Nick said.
“When you buy small, you have a little bit more control over the pace, you have a little bit more control over the lifestyle, and how you execute and the decisions that you make. You have a lot of autonomy and control of your schedule, and you're not really beholden to anybody, there's nobody that's going to guilt trip you for not working hard enough.”
Here’s a quick breakdown of Nick’s other acquisitions:
- All 9 acquisitions Nick made post-Wright Gardener cost less than 50% of the overall company’s revenue at the time he added the new company to their portfolio.
- The smallest companies Nick went for had about $100K in revenue, with the average being around $200k.
- The teams at each company ranged from 2 to 6 employees.
All Roads Have Bumps, But Clarity and Conviction Help Smooth Them
While many things like timing, market status, and industry stability have worked in Nick’s favor, that doesn’t mean it’s been an entirely easy process.
Even though he’d come across and mitigated some of the challenges of running a business before, there were things he had to learn on the job, getting his hands dirty at a small, lean level.
He mentioned that HR and meticulous budgeting as two hurdles he had to get over. He also had to play a lot more roles himself, until an acquisition scaled enough for him to be able to hire someone else to do it.
Nick stressed the importance of knowing yourself and being able to trust in your competence when acquiring a 30-year-old business like the ones he bought. He was aware of and ready to systemize and streamline the small businesses he purchased, seeing companies with haphazard processes as opportunities for him to do what he does and loves best.
“Figuring out how your skills match with the needs and the points of scarcity of the business that you're looking at is important, because to really make sure that you’re a success there's got to be a good fit,” Nick said.
Knowing his strengths, needs, and setting realistic expectations helped Nick Haschka go from working for others to owning 10 businesses in the span of five years. And he shows no signs of stopping.