6 Months in the Truck: Buying an Ice Delivery Biz

n 2020, Brandon Adams and his friend Don Ware teamed up on a plan to acquire a portfolio of five to 10 established businesses. Philadelphia Dry Ice became their first acquisition.

Following the advice of entrepreneurial family and friends, the new business partners initially avoided brokers and listings and instead conducted a search on their own. They created a list of 2,000 local businesses and set out to identify those that were doing well, with owners who were ready to exit.

However, the right one ultimately came from a broker they had established ties with during their independent search.

Philadelphia Dry Ice hit $2.8m in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2020. The seller (who had himself acquired the business from the founder) was very upfront that this figure was an anomaly, the result of soaring demand for food delivery during the COVID pandemic. To give Brandon and Don a more realistic idea of what to expect, he showed them numbers for the previous years, which peaked at around $850K in EBITDA in 2019.

Brandon and Don bought the business with 80% SBA financing, 10% seller note, and 10% equity. They structured repayment to give themselves a comfortable margin from the beginning.

Right away, the partners discovered they’d been so focused on cash flow that they hadn’t thought about what it would take to run the business day in and day out. Brandon found himself on a delivery truck, handling emergency calls in the middle of the night.

In this episode, he explains how that hands-on approach ultimately won over the staff they inherited, which was one of his most important business missions. He also shares his and Don’s process for finding and vetting potential businesses, and why he believes a diversified portfolio is less financially risky.

‍Check out:

‍✳️ About Brandon Adams

✳️ Top takeaways from the episode

✳️ Episode highlights with timestamps

✳️ Links & mentions

Acquisition Entrepreneur: Brandon Adams

‍💵 What he acquired: In partnership with his friend Don Ware, Brandon acquired Philadelphia Dry Ice, a local dry ice distribution company established in 1975. They were the third owners and took over in 2021 after the company experienced an incredible surge in business during the COVID pandemic.

‍💡 Key quote: “Leadership and business are a lot like having a coaching tree in the NFL. The wins and losses only tell one side of the story, and it’s a really small side of the story. What tells me more about how you ran your organization is where other people have gone, and how they’ve succeeded, and what they’ve told people about you.”

‍👋 Where to find him: LinkedIn | Twitter

Acquisition Tips From the Episode

‍Top takeaways from this conversation

‍😉 Who can you trust? Go with your gut.

‍Brandon and his partner Don both had entrepreneurial families and friends. On their advice, they decided to seek out soon-to-be retiring business owners who hadn’t necessarily listed their businesses for sale yet.

One connection they didn’t have was a trustworthy broker, so they simultaneously vetted brokers as they narrowed their guidelines for acquisition-worthy businesses.

Each time they interacted with a new broker, Brandon says they’d ask themselves questions like: “What kind of feeling are we getting in terms of how easy they’re going to be to work with? What kind of information are they going to be willing to share, and how?”

They listened to their intuition and found a few brokers with whom they formed solid relationships, including the one who ultimately sent them Philadelphia Dry Ice.

🚚 Take your due diligence beyond the books.

‍While Brandon says they spent a lot of time and energy checking out the business’s finances, they didn’t necessarily ask about the day-to-day of the dry ice industry.

“Where we probably lost sight was [in neglecting to find out] what the owner was doing every day, and how that was going to affect our lives once we owned the business,” he says.

From the day they took over, he was driving a truck nearly 12 hours a day, and fielding emergency delivery calls in the middle of dinner with his family.

In the end, the oversight was a blessing. Having to be on the front lines helped Brandon and Don build credibility with the existing team, and familiarity with their daily struggles.

☮️ Make sure the team knows you come in peace.

‍Unlike some new owners who clash with current employees, Brandon and Don did this part right. They knew that Philadelphia Dry Ice was a family-oriented company, and they honored this legacy by getting to know each team member and considering how they could facilitate their personal growth.

Your story as a leader is about where your people end up. Think of the employees you acquire as “your people” from the start. Care about their personal goals and your role in helping them get there.

🧗 Diversified ownership can work — if you’re up for the challenge.

‍Distribution and logistics is just one field Brandon and Don aim to learn about. They’re on a quest to own a portfolio of five to 10 businesses together, in various industries.

Rather than seeing diversity as a potential obstacle, the pair likes the idea of learning new things as they acquire different businesses. Plus, they’re optimistic that spreading their proverbial eggs between multiple baskets will lower their overall risk.

Episode Highlights

‍Inflection points from the show

‍[1:59] Brandon’s military and finance background.

[5:11] In 2015, Brandon and his friend Don Ware formed a partnership called K4, with the ultimate aim of buying a portfolio of varied, established businesses from retiring owners.

[8:44] Brandon was surrounded by entrepreneurs his whole life, including his parents, and he found the support of experienced friends invaluable throughout the acquisition process.

[10:37] Brandon and Don searched for their business themselves, visiting or sending letters to nearly 2,000 Philadelphia business owners, and doing some basic research on revenue and ownership for each.

[14:06] Brandon says they avoided brokers because they wanted to discover a great business, rather than only looking at ones that were for sale.

[15:28] Finding a broker you feel safe with is hard, especially in 2020, when there weren’t any in-person networking events happening.

[17:17] Brandon used BizBuySell to find potential brokers, then evaluated how open they were about sharing information, and how well they listened to his criteria.

[18:52] Brandon and Don looked for businesses in the $1m to $5m EBITDA range to avoid competition with private equity firms and for something that complemented their financial and manufacturing backgrounds.

[21:16] Brandon and Don were impressed by the diversification of revenue in Philadelphia Dry Ice: 65-70% was from dry ice sales, and the rest came from truck management and delivery logistics.

[24:30] In 2020, the business accomplished an EBITDA of $2.8m almost entirely from inbound business and with no marketing or sales due to the extreme surge in demand for food delivery.

[29:19] Having initially decided to grow the business by taking a relatively conservative approach, tackling basic inefficiencies, the partners are now looking into growth opportunities.

[34:08] Brandon shares that they financed the acquisition with an 80% SBA loan with a 10-year amortization, 10% seller note, and 10% equity.

[35:48] Brandon and Don neglected to find out about the day-to-day running of the business — which forced them to jump right into driving delivery trucks and take calls at all hours of the day and night.

[39:46] After a few weeks of interrupted family time, the new owners replaced the 24/7 delivery policy with set hours and introduced order minimums.

[43:19] Brandon says he didn’t know enough to ask about day-to-day operations — and that the seller’s answers may not have helped anyway.

[47:39] For Brandon, earning the trust of the family-oriented team at Philadelphia Dry Ice was a matter of asking each person about their goals and aiming to facilitate them.

[52:08] Building a portfolio of businesses in different industries introduces new challenges, but it’s also a solid diversified approach on the financial side.