Key Points From the Interview
t’s not every day that you hear about a New York finance guy who made the switch from private equity to blue collar business owner like Adrian Pinto did.
And there is a lot to take away from his acquisition story.
While working in PE, Adrian saw nine-figure blue collar businesses that had been built via acquisition. Intrigued by the idea of acquiring a blue collar business empire, he also liked the aspect that he didn’t need to be an engineer or operations expert.
He left private equity and took a different job that gave him the flexibility of working on his search on the side. He and his family had decided to move to Atlanta, so his search was limited to that area. Initially attracted to HVAC, plumbing, and electrical businesses, he discovered that lenders in Georgia prefer business owners to be licensed in those particular trades. So he dropped that idea.
He enlisted the help of a buy-side advisor, someone who had connections in the Atlanta business community who could get Adrian a proprietary look at businesses coming up for sale. After hitting a few bumps, the advisor brought his attention to a commercial landscaping business.
Initially reluctant to get into landscaping, as Adrian dug into the industry further, he saw similarities to what he liked about HVAC, electrical, and plumbing businesses. He acquired Atlanta-based Georgia Scapes in July 2021.
In this episode, Adrian discusses what drew him to the idea of growth through acquisition, what he had to change about his perspective coming from the private equity world, making plans for integrating systems in the future, and why he’s even more excited for his growth plans after operating the business for six months.
✳️ Episode highlights with timestamps
Acquisition Entrepreneur: Adrian Pinto
💵 What he acquired: With a background in finance, investment banking, and private equity, Adrian had seen huge nine-figure blue collar businesses that had grown through acquisition and was intrigued at the idea. He took a job that allowed him to search for a business on the side, and eventually found a commercial landscaping business through a buy-side advisor. Adrian acquired Atlanta-based Georgia Scapes in July 2021.
💡 Key quote: “I felt like these are pretty simple businesses, and so if I could get my head around the underlying work that they're doing, I could probably figure out the other sides of it, and then utilize this private equity playbook of just being aggressive with M&A, aggressive with pursuing growth opportunities, and try to bring that down, basically, to this SMB level.”
Acquisition Tips From the Episode
Top takeaways from this conversation
🌱 Market appeal: Commercial landscaping is highly fragmented and growing.
Adrian wasn’t immediately sold on the idea of owning a commercial landscaping business and thought that it could be similar to residential landscaping (which can be prone to pricing wars). But the picture changed as he looked into commercial landscaping more closely.
“Here's a multi-billion dollar industry, but the number one player only has 1% of it. It's super fragmented, it's growing at 4% per year,” Adrian observes. “If you look at the kind of long-term trends of the industry, there's not a lot of cyclicality or variability in performance,” he says of what he liked about the market.
📋 Finance is the easy part, operations is the hard part.
Coming from a background in finance, there were parts of the acquisition process that were well-suited to Adrian’s skills, including building financial forecasts, working with a lender to put together a cash flow model, and showing them the payback period.
Adrian’s spoken with people who work in operations and are excited at the prospect of running a business, knowing they can handle it because of their experience, but they’re worried about the acquisition. For Adrian, it was the opposite, and he was nervous about operating a business.
“Learning the acquisition side is frankly, probably easier than the business side of things. If you're someone that has experience working with teams, or … working with people to achieve a collective goal, I think that that, frankly, is more important than simply knowing how to build a model,” Adrian says.
🧱 Build your business “chassis” first if you want to grow through future acquisitions.
After taking over Georgia Scapes, Adrian reached out to the former owner of a portfolio company he worked with in PE. The owner had executed a successful acquisition growth strategy, and Adrian asked for his advice.
The owner told Adrian that he should be 100% focused on building a “chassis” that can support other businesses. He wrote a Twitter thread explaining the concept. As an example, Adrian cites Georgia Scapes’ archaic payroll process that uses physical timesheets.
“It's an incredibly archaic system, and it's not built to scale, so if we went and did an acquisition tomorrow, and added 10 more people, it would just be a massive headache to our current process. And so, to the chassis point, we're not set up for that today,” he explains.
👷🏽 A PE business transition most likely won’t work in a blue collar business. Here’s what to do instead.
At first, Adrian thought he’d use the private equity approach of a 100-day transition plan. He took notes, asked questions and started making suggestions right off the bat. But he quickly realized that wasn’t the right approach with employees who grew apprehensive that he was going to break everything down and start over.
He pivoted in his approach. He kept taking notes, but he waited to act. He broke his notes and ideas into categories, and after a few months, he held a team meeting and was able to bring up his ideas in a way that fostered an open team discussion.
“It was so much better because at that point, I'm more informed. So I'm coming from a place of understanding when I'm asking these questions. So now, these are not stupid questions, these are no, I know why we're doing this, but let's talk about X. And I think that was much better. And I think that the team appreciated it a million times more,” Adrian says.
Inflection points from the show
[4:20] Prior to his acquisition journey, Adrian worked in private equity. Through PE, he saw successful examples of growth through acquisition.
[8:33] HVAC is a fragmented industry and Adrian shares an example of an HVAC company that built partner networks in areas they didn’t serve as a way to provide ongoing service for customers. Plus, it creates a pipeline of M&A opportunities for the company.
[12:53] Coming from PE, there was a learning curve when it came to SBA 7(a) loans. But Adrian was “blown away” by how attractive the financing possibilities are.
[15:14] Adrian knew he wouldn’t have the time to dedicate to a search while working in PE. He ended up taking a new job where he’d have the flexibility to search on the side.
[17:15] Adrian started his search when COVID hit in March 2020. He discusses the benefits of searching during COVID, as well as the difficulties involved when your search is limited to a specific geographic area.
[18:57] Adrian ended up enlisting a buy-side advisor (a broker who works for the buyer as opposed to the seller) who ended up introducing him to Georgia Scapes, the business he would end up acquiring.
[22:25] Adrian targeted HVAC, plumbing, and electrical businesses due to their stability. Owners need a license to operate those businesses in Georgia (where he wanted to make the acquisition), so he went with a different market.
[25:24] Adrian details why a self-funded search made the most sense for him and his situation, rather than a traditional search fund.
[27:16] At first, Adrian wasn’t interested in Georgia Scapes or commercial landscaping. But he changed his mind after doing some research.
[30:19] Adrian explains the positives and negatives of the commercial landscaping industry, including the high margin areas of the industry as well as the difficulties of generating new business.
[37:27] Georgia Scapes does between $3M and $5M in revenue with approximately 15-20% margins.
[42:40] With his background in finance, putting the deal together and working with a lender was the easy part for Adrian. Business operations was a different story.
[45:16] Adrian plans to grow through further acquisition. Now he feels even better about his vision after owning his first company for 6 months.
[49:39] Adrian expands on his Twitter thread about the “chassis” concept, the idea that an owner needs to be focused on building a system meant for easy integration in the future.
[59:10] When taking over the business, Adrian initially intended to develop a 100-day plan, but quickly realized it wasn’t the right tactic. He changed strategies and decided to write down his ideas and wait several months before introducing them, which proved to be much more effective.
[1:06:08] With the plan of growth through acquisition, Adrian shares his thoughts on the advantages and disadvantages of mixing different business cultures.