Summary

In this conversation, Nathan Lenahan shares his journey through multiple business acquisitions, focusing on the HVAC industry. He discusses the challenges faced during his early acquisitions, the strategic shift to HVAC, and the lessons learned along the way. Nathan emphasizes the importance of building a strong team and company culture, navigating growth challenges, and the recent launch of his recruiting business, which has provided a new revenue stream. He outlines his future plans for expansion and the potential for further acquisitions in the HVAC and plumbing sectors.

Takeaways

Nathan's early acquisitions taught him valuable lessons about due diligence.
The importance of having a strong team and company culture is crucial for success.
Recurring revenue models, like HVAC maintenance, provide stability.
Navigating growth challenges requires adaptability and strategic planning.
Building credibility in the industry can lead to off-market acquisition opportunities.
Recruiting skilled technicians is a significant challenge in the HVAC industry.
Nathan's recruiting business has become a vital source of income.
Understanding the financials and market conditions is key to successful acquisitions.
Maintaining a balance between growth and cash flow is essential.
Future expansion plans include plumbing and electrical services to diversify revenue.

 

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Transcript:

Kajabi Course Video DRG (00:01.306)
Welcome to Top &A Entrepreneurs. Today my guest is Nathan Linehan. Nathan's made three acquisitions in the HVA space. He's also an Army guy. I'm an Air Force guy. Welcome. Thanks for the service. But this is one of the things with the podcast. Everybody thinks, my God, he's made 15 acquisitions, he's made three acquisitions, and it was all about the roses, right? That wasn't the case, was it?

Nathan Lenahan (00:28.433)
Definitely not for me.

Kajabi Course Video DRG (00:31.194)
All right, let's talk about that. I'm looking at your LinkedIn and I tell you, you should go to his LinkedIn page because he's got to get the corny joke stuff and his, but he talks about when he got into this business of acquiring companies back in 2016 ish, how'd that go? Tell us about that.

Nathan Lenahan (00:51.697)
Yeah, so I bought a company with, I have a twin brother, army guy as well, and he is in the trucking industry, really, really, really knows his stuff. And I was currently at WeWork, so fast growth startup, really deep in it. And, but I knew I wanted to buy a business. so honestly, he kind of took the lead. We did everything wrong that I think you can do wrong basically along the way. And, and I, I definitely know better, but

The best thing about us is we have this incredible sense of urgency and it bit us in the ass this time. So we bought this business, really small trucking, like fleet maintenance and repair business, diesel repair, anchored with a large customer. you know, not just one large company, but a significant portion of revenue for sure, like higher risk than most people would accept. And the price was, you know, I think we spent

Kajabi Course Video DRG (01:37.132)
One large customer?

Kajabi Course Video DRG (01:42.212)
Yes, yes.

Nathan Lenahan (01:48.669)
300 ,000 on this business, 350, something like that. We didn't do SBA, we just threw together our own cash and like some unsecured loans and jumped into it. And honestly, we got our ass handed to us. So jumped in, took over the previous owners immediately trying to steal employees.

you know, having issues with the landlord and, then just trying to grow and figure out like exactly what we have. and we just didn't do the depth of due diligence that we should have. the revenue was there, so that was good, but, you know, ultimately we just hit landmine after landmine after landmine after landmine. And so, my brother, like once my brother got in deep, I'm still working my full -time job. He's jumping in deep. He's running everything day to day and.

He figures out the previous owner was stealing from customers because of the guy had figured out a really sophisticated way to kind of manipulate retreading of tires. And somehow he was stealing money from customers basically. And so we went and shared that with the customers, walked through it, managed to keep everyone, but we wanted to make sure we were honest and like, this is what we discovered and wanted to share with them. So that went pretty.

good considering how crappy the situation was. then, and then that's when he was really trying to poach employees. So was kind of like the second big landmine. And then the third big landmine was, the lease that we had, we thought we had three years left on it. And it turns out we were in a month to month situation. The other tenant in the building was a large, like box distribution company and they didn't like us there. They didn't want us there.

And the owner was looking to sell potentially the building anyway, so he kicked us out. So it's really hard to have a a repair shop without a shop, you know? And yeah, I feel like an idiot saying this stuff to people and sharing it, but the lease had been falsified. So like, I didn't go back and actually verify with the landlord before we signed the deal. We didn't do bank loans, like there was no SBA, so they didn't necessarily look at that stuff either.

Kajabi Course Video DRG (03:40.928)
Yeah, yeah, yeah.

Kajabi Course Video DRG (03:55.898)
So you just gave him like $300 ,000 cash. Yeah. Yeah.

Nathan Lenahan (03:58.981)
Essentially, Well, we did have some, there were some holdbacks, there was some kind of earn out situation. And then he, the smartest thing we did was he signed on the dotted line for some of the loans. And so when things went to crap, it did mitigate some of our losses, which is great. Yeah, I blew up in our face. I lost pretty much my whole life savings in that one.

Kajabi Course Video DRG (04:18.873)
Yeah.

Nathan Lenahan (04:27.013)
I think one of the taglines I say is like, paid for an education I didn't know I was getting.

Kajabi Course Video DRG (04:31.162)
Did you go after him legally or did you write that off?

Nathan Lenahan (04:34.845)
So we did, we started to, but at the end of the day, like there's one thing to get a judgment. That's, that's like not even 50 % of the problem. Yeah. And so like you go get a judgment and then you still got to go collect. And so, it wasn't worth it to us to try and go down that road. However, he was doing some other kind of fraudulent things that we were notified about from other people in the industry got contacted by the FBI.

Kajabi Course Video DRG (04:41.988)
That's a five -year road maybe. Yeah.

Nathan Lenahan (05:01.179)
May or may not have helped with, you know, sharing information about where he could be and how they could find them. Yeah. So, so certainly weren't very helpful in that regard for him, but no, we did not end up going after it. Wasn't worth it. we did end up kind of fire selling the company to a competitor. So we recouped a little bit there, but, know, we both lost, you know, over six figures in it and, really sucks, but that's what happens when you don't do the due diligence as opposed to, and go deep and.

Kajabi Course Video DRG (05:07.226)
Stack the charges. Yeah.

Nathan Lenahan (05:30.917)
and really understand like what good looks like. And then also I wasn't in the business either. So I wasn't there to help kind of mitigate some of those things that I knew better than my brother. So that's on me for sure.

Kajabi Course Video DRG (05:40.014)
Yeah. Yeah. And this is not like a monopoly game where you lose and you just start over. This is like an emotionally traumatic, my wife's going to kill me kind of thing. Like how long did you go through this, you know, frozen tundra where you couldn't see anything to come it out going, my God, let's, you I'm going to, I'm going to do this again.

Nathan Lenahan (06:08.605)
I'm not good at giving up, if I'm honest. So like, I think I figured it was a matter of time for me to want to do it again. The relationship with my brother and like his wife and all that, like that was a lot more in jeopardy. That's been a lot more difficult, but me and my brother are super, super close. We're twins. Like we've been through so much shit together. Like you can't break that, but like, you know, other people who may have different opinions, like that's harder. It's harder like building the trust or.

Kajabi Course Video DRG (06:36.26)
Yeah.

Nathan Lenahan (06:36.573)
convincing, let's say his wife to let me let us do something together again, or even my wife, right? So, so super hard there. And it did take a few years for me to, you know, convince my wife to let me take a chance again, I had to go back to something I knew. So we bought like a small apartment complex a few years later instead. And, you know, went down that road. And then after that bought another business. I think that ended up being about five. Let's see. I think we finished in 2018 was that failed business and then bought a

real estate in 2020 and then the next business in 2021. So three, three and a half years. Yeah.

Kajabi Course Video DRG (07:11.108)
and a half years. Yeah. So that's the healing period. Like coming back from getting injured. Yeah. So what was that real estate business? It was the apartment complex or was a manager?

Nathan Lenahan (07:16.379)
Yeah, exactly. So.

Nathan Lenahan (07:24.509)
Yeah. this time it was a, just a small, like 35 unit apartment complex with, one of my, one of my other partners, but we, we had built a property management company together and sold it in 2016, to a private equity roll up. So, so we, we came from that space, knew what kind of growth looks like started from scratch, built it up to like a hundred, you know, 125, 140, something like that. you know, units sold it off.

Kajabi Course Video DRG (07:39.031)
interesting. Yeah.

Nathan Lenahan (07:51.709)
because we figured out how to grow really fast. We didn't figure out how to cashflow as fast as we did. So, and it's a super painful business, but we learned that and then we both ended up going to WeWork after and got to see what scale looked like in addition to like that startup.

Kajabi Course Video DRG (08:07.512)
Yeah, however you call that scaling.

Nathan Lenahan (08:11.101)
Hey, mean, scaling is scaling. It's like I challenge other people to grow a business from zero to billions of dollars in less than 10 years and build millions of square feet. It's a hard business. But regardless of what you see out there, I had an incredible time. Some of the best people I've met in my career. It was a lot of fun. But yeah, the cashflow side, not so strong again. Let's say that was a thing.

Kajabi Course Video DRG (08:39.278)
Yeah, there was people calling what? Wait a minute. You're just a management company. You're not. Yeah.

Nathan Lenahan (08:43.815)
a hundred percent. Okay. So like, won't, I won't even challenge that. Like, were you a tech company? We're definitely a real estate company for sure. Tech enabled. Sure. But, yeah, we're a real estate company and that's what we were good at. And, there was a huge vision to build enough scale on the real estate side to like enable some really cool things that I think would have taken it made us more than a tech company or than a real estate company. But that's a whole different discussion. but yeah, I mean, super cool. was.

Kajabi Course Video DRG (08:49.422)
Yeah, yeah.

Nathan Lenahan (09:10.748)
It's funny how people think you're so stupid or like all the leaders are dumb at we work and

Kajabi Course Video DRG (09:14.65)
my no, what's a Sony Meshigo -san put in a $20 billion, didn't he? Something like that, yeah. He's one of the smartest guys on the planet for his investing, Yeah.

Nathan Lenahan (09:18.993)
Yeah, yeah, it's unreal.

100%. So fun, stop, learn a ton. And then, try to use it in other startups and our own growth of acquisitions.

Kajabi Course Video DRG (09:31.576)
All right. So fast forward your, how do you decide on an HVAC company? Do you, I got like, I got to buy essentials. You know, I got to buy something people need every week. It's cash flying. What, what was the thought process? Let's get smarter. And, and did you include your twin brother on this? Is your.

Nathan Lenahan (09:47.727)
Not this time, he's not allowed to do anything with me yet. Not yet.

Kajabi Course Video DRG (09:51.066)
Is that his wife's rule? Yeah. Yeah.

Nathan Lenahan (09:57.861)
Yeah, I think he's got trust to build back to right like we I mean, I say it in a funny way with my wife like, hey, we've planted a lot of seeds. They just haven't necessarily grown as fast as you know, we would like all them to you know, and so they're not all bearing fruit yet, but they will and I feel like that's been the story.

Kajabi Course Video DRG (10:13.606)
It didn't turn out favorably, that's not how, that's not life's not roses all the way through your life. Yeah.

Nathan Lenahan (10:19.453)
It's certainly not. So, but we have always been on a trajectory that's been like, you know, up into the right, which is, know, we've been married for 22 years at this point and, we've been through everything together. but no, he's not a part of this one. It's the same guys that have built the property management company together with, and then, the same guys I've dragged all of them to we work with. And then we all, you know, left there, did our own thing for a little bit. And then we came back together to buy, there's two main drivers behind HVAC specifically.

Kajabi Course Video DRG (10:25.56)
Yeah.

Kajabi Course Video DRG (10:37.742)
Yeah.

Nathan Lenahan (10:49.705)
Number one was absolutely what you said, it's essential. like after being at WeWork and then I went to a multifamily leasing company after that, they just weren't necessities. Like they weren't essential.

Kajabi Course Video DRG (11:01.402)
Right, right. I don't need this on a day -to -day basis. Air conditioning breaks down in Tucson, Arizona. It's 103 degrees today here in September 25th. If it breaks down, they're here in an hour and I'll pay it.

Nathan Lenahan (11:04.923)
thousand percent.

Nathan Lenahan (11:15.517)
100%. So we wanted that. And then we had this thesis of the skilled trades of electrical plumbing, HVAC. HVAC has the highest recurring revenue because they have this unique membership program that's usually around maintenance. And then you get some kind of discounts and you're just trying to build loyalty, honestly. And so really like that idea. And then we believed that there is an ability to start laying some technology on top of that of like, how do you sell systems? How do you create more transparency in an industry that there isn't?

a whole lot of transparency, NPS scores are pretty much the lowest of any industry out there, the exception of car repairs and car sales. so lots of opportunity, I think, to do better. so, yeah, we continue to kind of play with that. We've sold, I don't know, a little over half a million online, like giving upfront pricing and letting people kind of shop at their leisure and at their kind of...

their level of education that they want instead of being pressured in their home. So I think there's going to be a huge turn on that in the next 10 years or so. But yeah, it's really interesting. So that was a thesis, essential and recurring revenue. then HVAC is actually pretty simple. It's usually like the same 10 to 15 things over and over and over again that go wrong.

Kajabi Course Video DRG (12:25.06)
Yeah.

Kajabi Course Video DRG (12:32.567)
And high margins. Yeah.

Nathan Lenahan (12:35.101)
High enough margins, you know, want, we're targeting 15 cents on the dollar EBITDA wise, you know, and it's not that much. Like it's hard to get that. So yeah, great business, but highly seasonal too. So seasonal in Texas that it's, we've been about eight to nine X revenue between our best month and our lowest month.

Kajabi Course Video DRG (12:36.568)
Yeah.

Kajabi Course Video DRG (12:46.009)
Yeah.

Kajabi Course Video DRG (12:56.954)
geez, that is a big difference, Delta. Yeah. So what did that look like that 2021 you bought your first HVAC companies with some partners? Do you go through the, just raise the money and do it yourself or do you go through the traditional SBA route?

Nathan Lenahan (13:13.629)
Yeah, we went SBA and then our own cash. So of all the acquisitions we've done, we've never gone outside investors or anything like that. We have done debt. So this one was really small. We, the first one we bought was probably just a little under a million in revenue. And you know, small guy, great reputation, been around for 20 years and tried growing it bigger, didn't necessarily enjoy the responsibility that came with a whole bunch of technicians and all that stuff. So.

Kajabi Course Video DRG (13:40.655)
Right.

Nathan Lenahan (13:42.075)
So it of back smaller. So when we bought, was no, like no employees came over except for two technicians, basically.

Kajabi Course Video DRG (13:48.916)
Why'd they quit? that's all there was. Okay.

Nathan Lenahan (13:51.229)
I mean, that's all there was. It was husband and wife. like wife did the, did the, you know, taking all the calls and all the bookkeeping and stuff. So she didn't come and then he didn't come. So he was the third technician essentially. And so we had to replace that person, but it wasn't big enough. It was not even a million in revenue or right around a million in revenue. So, so we started way smaller than we wanted to. We wanted to be buying like the normal search fund criteria, 5 million in revenue, you know, a million EBITDA. but.

Kajabi Course Video DRG (14:09.123)
Yeah.

Kajabi Course Video DRG (14:18.074)
Yeah.

Nathan Lenahan (14:19.409)
We kept getting outbid, so we decided we'd rather be in the game and start smaller than talking about the game. So we jumped in and there's four of us partners. So in the beginning.

Kajabi Course Video DRG (14:23.812)
little.

Kajabi Course Video DRG (14:31.29)
How's that split and then like, did you all have to sign personal guarantees or did, were some in that or out of it? Yeah.

Nathan Lenahan (14:39.207)
Yeah, there's one that's a minority partner. He doesn't sign into the guarantees. And then there's three of us that are all signed on personal guarantees. But I think we've learned a lot about that, right? Like we have some decent real estate portfolios and stuff and figuring out how to navigate that and make sure you're not collateralizing all those assets has been, yeah, it's been interesting. And we haven't actually had to pledge as much as we thought we would, know, at least say,

Kajabi Course Video DRG (14:59.928)
Yeah, yeah.

Nathan Lenahan (15:08.455)
know, unconditional guarantees and that's true, but not true. mean, you know, there's lots of things are negotiable, I'd say, as long as you know what you're doing. So, and then Texas also, we're really lucky that we're in Texas because they can't take your personal.

Kajabi Course Video DRG (15:15.118)
Yeah.

Kajabi Course Video DRG (15:26.446)
Yeah. interesting. What law is that? Yeah.

Nathan Lenahan (15:27.857)
Yeah. It's a Texas law. They can't collateralize and take your personal.

Kajabi Course Video DRG (15:35.258)
Interesting didn't know that I don't remember that recall that in Arizona They were going after all of our we signed a personal guarantee on a lot of like, you know, 10 15 years ago They were like, okay all your assets

Nathan Lenahan (15:47.921)
Texas, Texas protection. I think there's very few states that do it, but Texas is one of them where that's a huge benefit of.

Kajabi Course Video DRG (15:52.954)
That's why people are moving to Texas. Why Elon's moving to Texas?

Nathan Lenahan (15:55.549)
But yeah, mean, collateralizing all those. So yeah, I that one went pretty well. We bought right around a million and then we took it up to 1 .7 million after the first year. So learn about it.

Kajabi Course Video DRG (16:07.896)
Yeah. And how did you guys decide there's four people and it goes like, this is your role. That's your role. That's your role. Cause two people, husband and wife were running it before. Now you got four people going a lot of chefs in the kitchen.

Nathan Lenahan (16:21.693)
Yeah, I mean, not everyone's in the in their day to day in the beginning. It's not big enough, right? Like I was a pretty high earner before this. I'm not going to come in and make, you know, $40 ,000 necessarily or $50 ,000 to answer phones. That's not really where I add value. But to be fair, I did work that whole first year full time, you know, 50 hours plus a week. And I didn't pay myself. I think I paid myself $5 ,000 that first year. So I'm not even worth the $40 ,000. I was just making fun of. So who knows?

Kajabi Course Video DRG (16:25.892)
Yeah.

Kajabi Course Video DRG (16:35.972)
Could you see your time? No.

Nathan Lenahan (16:51.293)
Thankfully, I'd gotten laid off from another job, got a pretty generous severance. And so like I wasn't worried about burdening the business with me.

Kajabi Course Video DRG (17:01.844)
I need cashflow, right? I need somebody to pay me. Yeah, that's.

Nathan Lenahan (17:04.707)
Exactly. So Scott, is who's our partner, he was running the day to day as kind of our GM. And he's just like the best human being you'll ever meet. And he has such a high tolerance for pain, which makes him perfect for getting in there and grinding. so while he's grinding, it helped me

focus on the systems and like building the foundation for him. like making sure price books great and that we integrated service Titan and brought that in and then getting financing for customers built and then getting new vans and like fleet management and then figuring out loans. And so that worked out pretty well. And then our third guy was in marketing sales. And so he kind of just was focused on growth there and trying to figure that out.

And then the fourth guy, he's our finance guy. So he wasn't in at all. He was still working a full -time job somewhere else.

Kajabi Course Video DRG (17:51.258)
Gotcha, yeah. And you guys figure that the level economics of that and we're able to grow that to 1 .7 in their first year, two years? Yeah.

Nathan Lenahan (18:00.285)
Yeah, first year 1 .7, which doesn't feel that much when I say it out loud, but man, we worked hard to get it there. Yeah, I would rather go zero to one than one to three and a half has been just a freaking nightmare. like the, it is so painful, I think, going from that because you're investing in all the...

Kajabi Course Video DRG (18:08.952)
Yeah, it's always the hardest, I think.

Nathan Lenahan (18:24.087)
overhead and leadership, so margins actually go down further and you're really just trying, like you don't have pricing competitiveness yet from like your suppliers, so your costs are higher and you're still trying to compete with the bigger guys. So there's just a lot of things that really work against you, but

Kajabi Course Video DRG (18:43.16)
and you got to hire technicians and they're getting paid more other places and you go like, why join us, right? Well, we're good guys. Yeah.

Nathan Lenahan (18:48.413)
Yep. 100%. Well, I mean, and knowing who you are really, really matters. it took us.

more than a year to figure out like who we are, what's our compensation philosophy, like how do you lure those people in besides just being, you trying to be great guys. And I think we're really getting that nailed down. Like we have our mission, change lives through the trades, create smiles, do it every day. We have our values, we have our compensation kind of philosophy. And then overall, like we're a tech first company, technicians and technology to create the greatest service on planet earth.

Kajabi Course Video DRG (19:21.967)
Yeah.

Nathan Lenahan (19:23.781)
So those are like the things that it took a little bit to figure out like identity and then who you know, like once you know who you are, then it makes a lot easier to track who you want.

Kajabi Course Video DRG (19:32.366)
Yeah, to attract the same type of people that are attracted to that. What was the compensation plan look like in the technician?

Nathan Lenahan (19:40.347)
Yeah, it just depends. We've changed multiple times. So beginning, was kind of like mostly hourly with some spiffs on like, if you sell this thing, or if you come help me install this, I'll give you, you know, throw some cash your way. and so we, kind of kept what the previous owner had for a little while, you know, while we figured things out. And then, you know, we took guys up a little bit on the base on hourly. and then we've looked at multiple things. I mean, guys get commission or bonuses based on things they sell.

you know, they get, or if they refer, you know, it's like, that's a big piece of like, you know, if John comes in as a technician and he goes into a house, it man, this thing's 15 years old. We can repair it for sure. Here's an option, but also let me introduce you to my, you know, our comfort advisor. he'll give you options for replacement as in addition to repair because like your cost of repairs are gonna be kind of crazy now, considering.

Kajabi Course Video DRG (20:28.995)
Yeah.

Nathan Lenahan (20:29.501)
older refrigerant, like all this stuff. And so they get, they get like a kickback for sending the salesperson in. And then when that salesperson closes, you know, they'll get a little piece of that pie. And so like at the end of the day, like we want to be probably that top, you know, quartile desk, like a decile of, of compensation, like a top 25 % of compensation for technicians. And we want to be a place that people want to work.

Kajabi Course Video DRG (20:49.039)
Yeah.

Kajabi Course Video DRG (20:54.924)
Any spits for net promoter scores?

Nathan Lenahan (20:59.111)
So they get not, don't, don't track NPS necessarily for guys, but they do get for, if their name's called out in a review, that's five stars. They get, they do get a bonus for that. And then we do talk a lot about just the customer reviews with them overall. So they get bonuses for that, but we don't necessarily track NPS as like a metric for them. They don't, they care, but they don't care on that, right? Like they, it just, it's not relevant to them.

Kajabi Course Video DRG (21:24.194)
Interesting, yeah.

Nathan Lenahan (21:27.485)
They can't go point to that to a friend or a family member that asks where they work and say, man, we're one of the best in industry. We've got an 86 NPS, but they can go and say, look, we've got 1500, four point, you five star reviews on Google. And so like that is way more relatable to them.

Kajabi Course Video DRG (21:40.526)
Yeah.

Kajabi Course Video DRG (21:43.972)
Yeah. And so when Charlie Munger says to show me the comp plan, I'll show you the outcomes. He's like really knows what he's talking about. Yeah.

Nathan Lenahan (21:51.013)
It's all about incentives, dude. Every behavior is there's an incentive.

Kajabi Course Video DRG (21:55.182)
And everybody's a little bit different. Like somebody wants a parking spot. This is like in Silicon Valley where they're some people wanted a parking spot. I go, I don't care.

Nathan Lenahan (22:02.395)
Yeah, a hundred percent. And some people don't want to be like, learned this coming out of the army, especially I went to work for Lockheed Martin and the team that I led was union. And so like some of these guys, like you'd go recognize them in front of their teammates and they'll pull you aside, like grab you by the collar. Like if you ever recognize me in front of everyone again, he's like, I'm going to kick you in the shin. I don't ever want that. I'm happy to be recognized, but I want it one -on -one.

away from everyone else. don't want to be called out in front of people. like people's incentives and what they care about are like very diverse. Yeah.

Kajabi Course Video DRG (22:35.61)
Interesting. Yeah, that's interesting. So in 2023, you bought your second HVAC. And what did that look like?

Nathan Lenahan (22:45.841)
So this is where the credibility I talked about, wanting to be in the game, started paying off a little bit. Because we got a broker who reached out, hadn't put a business on market yet, was just talking to people that he knows he's heard good things about in the...

Kajabi Course Video DRG (22:52.814)
Yeah.

Nathan Lenahan (23:04.221)
the market and everything. so we shot us and like one or two other people. And it was in Prosper, which is Northern DFW, very desirable kind of location, great demographic. the guy was the seller as an army veteran as well. we just we hit it off from day one. And it was it was still small to 1 .2 million in revenue, but a really nice kind of adjacent geography to us and then a great demographic. And we really like the sellers. So

So I had the chance to do that. Use SBA again. So no real.

Kajabi Course Video DRG (23:37.284)
What about the financials? Anything that you saw in there like this is worth what he's asking for it versus what you think will pay for it. How did you guys come across that? Yeah.

Nathan Lenahan (23:48.623)
Yeah, the

Nathan Lenahan (23:53.223)
I don't think they even actually put a price out if I remember right. So like we just went through the numbers and said, this is what we're gonna offer. And that's where we ended up. there was never even, they didn't even anchor on a spot, I don't think. No, so like.

Kajabi Course Video DRG (24:00.303)
Yeah.

Kajabi Course Video DRG (24:07.34)
never. Yeah. He just so new to the business. Like I want to sell my business. He goes to this broker and goes, they didn't even put a price on it yet. No.

Nathan Lenahan (24:16.155)
No, didn't even put a price on it. and I think the market was pretty frothy then, if I'm honest, like, you know, yeah, this broker is...

Kajabi Course Video DRG (24:25.114)
Yeah, 2023, it's still frothy for HVAC companies, yeah.

Nathan Lenahan (24:30.439)
So, I mean, it went well, like great handoff. We ended up just tucking that in under BARTs. And so, it's less about their numbers, it's about our numbers, right? Like you go and you say like, hey, well, again, we're just gonna end up with technicians. We already have everything else. We can absorb everything else without any additional head count. Like we can be pretty efficient with this. And if we have to pay a little bit of a premium, we can do that as well. And so we didn't necessarily need to do that, which was great. But yeah, I mean.

Penciled in great, great debt coverage ratio. So, you know, no issues there tucked it in. I think within 30 days, I don't think we lost a customer that I recall, from kind of changing their names or, or, you know, any of that stuff. And, and like the senior technician there, man, just fantastic. So, which is funny because both the companies, the senior guys, both named Jordan and where they're like our two, you two of our people we have overall still, which is, which is really.

Kajabi Course Video DRG (25:30.244)
So I'm curious how the comp plan adjustments went. You have your comp plan at Barts and you buy this new company. He may have a different comp plan. What kind of conversation was that and how that fall out?

Nathan Lenahan (25:43.739)
Yeah, it was very favorable for the technicians coming in because they got a lot more opportunities and higher base overall. So yeah, no one's ever had to go down or lose anything when we've acquired them, which has been really nice. So we have a very specific.

Kajabi Course Video DRG (25:50.904)
nice, yeah.

Nathan Lenahan (26:02.077)
amount that we can pay based on like, is what percentage of revenue should go towards technicians. This is what should go towards commissions. This is what should go towards uniforms. And we're happy to pay that. Like I want to pay for the best because we want the best. so, yeah, 1000%. So that's been great. So like every technician basically that's come over so far has gotten a raise.

Kajabi Course Video DRG (26:17.924)
You want to look the best too, yeah.

Kajabi Course Video DRG (26:27.748)
Yeah, and.

So what's happening to you now that stuff is actually happening? Good, right? How is your like confidence and you're saying, my God, have some, everybody's had strikes. Everybody's had some failures and misses. Now some things are happening for you. How's that looking for you changing your life with your, your wife and your brother and you know, your immediate family. What's that look like?

Nathan Lenahan (26:53.222)
Yeah.

Yeah, I mean, I think it's, last year was probably the hardest year because, yeah, trying to figure out like, Hey, is the business going to be big enough? Still not big enough for me to come in and really get paid. Yeah. I got paid for a little bit, like 30 K for the year. we'll be K. So I think last year I made less money than I made since I was like a PFC in the army. so it's really hard to talk about optimism for the future when, you know,

Kajabi Course Video DRG (27:07.716)
to get paid. You're still not getting paid? No.

Kajabi Course Video DRG (27:13.103)
Yeah.

Kajabi Course Video DRG (27:19.662)
hahahaha

Kajabi Course Video DRG (27:24.41)
Yeah, you don't want to know what I got paid in 1979 as an E1. It was embarrassing.

Nathan Lenahan (27:32.273)
Yeah. Yeah. so that, mean, that was really hard. And I think that's one of the toughest like conversations were happening with my spouse and like even our kids, because we have our oldest, he's a, he's a senior now in college. You know, we had another senior in high school and then I got two more kids. have four kids.

And my wife's like, I don't want to have to worry about spending $500 to go down and see my son, you know, in college and stuff or visit him or whatever. And I'm yeah, that's super fair. don't like, can't even, I've got nothing to stand on. So we actually had a countdown where it was like.

Either I have to go get a job somewhere else that pays, you know, something much better than what I'm making, or we got to get to a place where, you know, I'm making this money either through one of these company, you know, the HVAC company or something else I'm doing on the side with a consulting or whatever. So, and

Kajabi Course Video DRG (28:22.999)
Yeah.

Were you getting your insurance through the company or through Obamacare stuff? my wife works too. Okay, yeah, yeah, that's a good, that's a kind of a net to have.

Nathan Lenahan (28:30.162)
My wife works, so she has, yeah.

Nathan Lenahan (28:37.565)
It's it's I mean, she has been like the rock for us for every entrepreneurial pursuit I've had. You know, when we quit and started the property management company, that's like soon after she got her first job after being she got to be a mom for, you know, 15 years in our marriage. And then she went to go be she got her first kind of career role after that, which is really cool.

And so that did help us like take some risks, which is really, really exciting. So like I owe everything to her support, both financially and you know, she's just been an incredible support along the way. yeah, so head insurance there. And then also I did have it through for a long time through the National Guard and then disabled veterans. So through the VA I have at least for me, which is helpful too.

Kajabi Course Video DRG (29:23.982)
Yeah. And when did you start able, the, business started able to pay you what you're worth or is the owner never get paid what he's worth? Yeah.

Nathan Lenahan (29:33.469)
Still not yet So we're I'd say to two of the four guys are getting paid Still not what they're worth, but like they're getting paid Pretty well, I'd say like reasonably well and I think that's that corner is gonna turn here in the next probably 12 to 18 months, but Because the next acquisition we just finished it was significantly bigger than those two first ones

So that's really exciting to see kind of the growth overall, like a little bit. Let's not put all our cash back into growth necessarily. We might actually have opportunities to distribute in the future and or, you know, bring me on full time. But I honestly, started a recruiting firm in this space that that's been paying the bills since last like November and it's gone well.

Kajabi Course Video DRG (30:21.622)
so wait a minute, you still have another acquisition for the HPE? One more that you made? Or was this, yeah. okay. That's great. How big was this one?

Nathan Lenahan (30:27.871)
Yeah, we just did our third one here in the last three weeks. Yep.

This one was last year they did about 5 .8 million.

Kajabi Course Video DRG (30:37.978)
5 .8, you're really, now you're at what? Seven, $8 million top line or more? 10 and 11, fantastic.

Nathan Lenahan (30:43.933)
10 between 10 and 11. Yeah. Yeah. So, so of that, like, let's, let's say, let's just make it really easy math. say 10, 10 million, by end of year. And that, that's, that's combining the two revenues. mean, actual revenue for us will be probably like seven or eight, but, yeah, counting like forward progress revenue will be, yeah, like 10, 10 and a half. I think next year we'll probably plan for 13 to 14.

Kajabi Course Video DRG (31:12.718)
Yeah.

Nathan Lenahan (31:13.543)
But the, so that's, that just happened the last three weeks, which was really exciting. And I think we should have a chance to, you know, start thinking about bringing me on more seriously.

Kajabi Course Video DRG (31:23.812)
Yeah, and where did you find that one in the whole process of acquisition?

Nathan Lenahan (31:27.963)
Yeah, so this is again, like the credibility kind of building momentum over time. This one came through our supplier and we just kept telling everybody, hey, we're looking to grow through acquisition.

and organically, but if you know anyone that's interested, like we please make an introduction. And so, he made an introduction into literally our number one target company that we wanted because we kept going head to head to them with them on different things and losing. And they just, anytime we went on like next door or Facebook groups and someone asked for HVAC recommendation and flower mound where two of our partners live.

They would have like literally 20, 30 recommendations from people before another name was brought up. And we're like, what is going on? Do they have people on real reputation? And so we heard their name pop up from our supplier and we're like, give me his number now. I want to talk to him right now.

Kajabi Course Video DRG (32:14.042)
They've got a great reputation. That's, yeah.

Kajabi Course Video DRG (32:25.572)
Their supplier actually told you what they're thinking about selling? Yeah.

Nathan Lenahan (32:28.475)
Yeah, they knew that they were interested and so we asked if he could connect us and he connected us and it was an off market deal. They talked to a couple bigger players before us and ultimately like we, I think we built a wonderful relationship with the seller, super, super high character guy running an amazing business like.

really, really well run. like I can't say enough good things about kind of the process. I didn't have to deal with a broker, which was really nice. Like anything I needed, I just went straight to the sellers. And, and so I got to kind of guide them on what the process would be, the milestones, why we need to see things. And I really enjoyed it. Like I enjoyed it a lot. And, you know, like the first deal we did can't do a good deal with a bad person. Well, this is a great person and we got to do a great deal with a great person.

Kajabi Course Video DRG (33:17.05)
Yeah. Did you see patterns there, you know, somebody with a great reputation and everybody, you know, all customers recommended that they also had clean books, financials, good processes. Would you say that's true?

Nathan Lenahan (33:30.717)
They were definitely better than the first two. I would say on the kind of like the process and some of those things. But every one of them was just a little bit better, you know, because they all had great reputations. They all kind of own their market, all three of them, which is great. But this one was just much bigger. And that's the difference. And with that scale came...

a little more sophistication around like, we got to do this thing. we got to do bookkeeping better. We got to have better financials. We should probably invest in a little more technology for our CRM. And, and some of that stuff was done in preparation for stale too, right? Like putting the bow on something that was already pretty great. but most importantly, they, have a great team, and, a great culture in there. The leader, like he had pulled himself out of the business. Like 95 % of the way. had a GM running it.

and

Kajabi Course Video DRG (34:22.594)
Why did he sell? What was the motivation?

Nathan Lenahan (34:25.789)
He was just ready to move on. had put together a five -year plan before that of what he wants to do next. that time was up and he had a couple of good years or yeah, multiple good years of just that growth. And I think he was just done, ready to take a lot of that equity he'd built up. It was like 50, like great health. think he still got enough energy for one more shot at something, like another.

Kajabi Course Video DRG (34:30.785)
huh.

Kajabi Course Video DRG (34:40.858)
Yeah. Was he aging or was he, you know, 75 or just younger? Yeah. 50. Yeah.

Kajabi Course Video DRG (34:53.572)
okay.

Nathan Lenahan (34:54.033)
another kind of career in his life. And I think he wanted to take like all the goodwill that he's built here and apply that into the new thing that he wanted to give a shot.

Kajabi Course Video DRG (35:02.574)
Yeah. So it was an off market deal. Was this open to different creative financing solutions, seller financing, anything like that, or SBA?

Nathan Lenahan (35:12.317)
Yeah, I we, mean, every one of our deals has had seller financing for sure. But yeah, this was SBA loan as well. So we, he did, he did, let's see, he did a little over 10 % on, on seller financing. We did do a, like full standby for a couple of years on, on seller note, which was super, super helpful from our side. And then, you know, overall, like

Kajabi Course Video DRG (35:15.503)
Yeah.

Kajabi Course Video DRG (35:35.576)
Yeah.

Nathan Lenahan (35:41.021)
Yeah, I mean, it was just SBA financing 10%. And then honestly, we use like our balance sheet as our strength. didn't inject a whole bunch of cash or anything like that. And, and yeah, jump in.

Kajabi Course Video DRG (35:52.42)
Yeah, cause you're now in the same industry. The next, way that the SBA looks at that, the next code. Yeah.

Nathan Lenahan (35:57.317)
Yeah, expansion. Yeah, considered an expansion loan. So you don't necessarily have to inject a ton of equity, especially if you're showing like a strong balance sheet. So I think we did that. I mean, it was still hard because we went over the limit overall for SBA. So we had to learn kind of the parapassu.

Kajabi Course Video DRG (36:00.462)
Yeah.

Nathan Lenahan (36:17.629)
know, underwriting process, which made it a pain. I think it's usually like 15 or 20 page, you know, memorandums to like the credit committees. I think ours was like 76 or something like that, which is just crazy. So lots of, lots of learnings there, but we came out feeling really good and, you know, very excited about where we're going.

Kajabi Course Video DRG (36:27.93)
Wow. Yeah.

Kajabi Course Video DRG (36:36.43)
Yeah. And how was the integration of, say the cultures and comp plans? mean, cause that is to me, you don't want to go down. You want to go up, right?

Nathan Lenahan (36:46.109)
100%. So they are not integrated yet. So we're still working through that. And that's the, well, it's bigger than Barts. So Barts has been our primary company. The new one's called Christmas Air. And Christmas is bigger than Barts. If you were to adopt a name, all the numbers suggest probably Christmas if you're gonna just do one brand.

Kajabi Course Video DRG (36:50.673)
you're still, yeah.

Kajabi Course Video DRG (37:07.214)
Especially if you go to some site and they say recommendations, they'll say Christmas air, right? That's what you wanna leverage.

Nathan Lenahan (37:13.883)
Yep. Yeah, a hundred percent. like if you look at basically any number you want to, like you want to look at reviews, you want to look at like a site visits, you want to look at SEO, you want to look at impressions. I mean, most everything, Christmas beats Barts. And so if we're going to combine them, we'll pick a name, you know, probably like the numbers say Christmas. You sometimes my heart says Barts because that's what we've been through. But like at the end of the day, it'd probably be Christmas.

But that's been the biggest, very transparent conversation on, on the Christmas side is saying like, Hey, here's the things that are keeping us from combining them. If that's where we want to go. And we're not a thousand percent convinced. Like that's, that's where we want to go, but like, maybe, maybe it is where we go.

Kajabi Course Video DRG (37:57.854)
How do you solve that ego wise with four people in the management boardroom?

Nathan Lenahan (38:03.517)
We are all owners, but we have roles in the company and ultimately, like we know who makes the decision if there is a disagreement. And we do have time.

Kajabi Course Video DRG (38:15.908)
Yeah. And this is a big issue. It's like, do we do Barts? We've spent a couple of years building this brand and now we acquire this company and they've got a better, let's say they don't have a better reputation. They have a more recognizable reputation. What do we do? Right.

Nathan Lenahan (38:33.318)
Yeah. There is no, I don't, I don't know there's a clean answer on that, man. and we continue, like we have a deadline on when that needs to happen. It's something that's continued to be talked with, with leaders on, on where we're going. and we've been super clear on kind of, like there's not a decision made. We came in with our hunches of like what we thought we were going to do, but I would tell you the biggest, the biggest hesitations have been the compensation culture and cause they are different.

Kajabi Course Video DRG (38:38.967)
Yeah.

Nathan Lenahan (39:01.733)
And then just making sure we're honoring the culture of the other, of both sides, right? But mostly because like we pay commissions and Christmas didn't. That's the biggest, all hourly or salary, right? So that's the biggest difference and it's a meaningful difference. And we want to make sure there's buy -in of where we're going. then parts of me sometimes like,

Kajabi Course Video DRG (39:05.7)
Yeah.

Kajabi Course Video DRG (39:10.82)
interesting. They were all hourly, huh? Or just, yeah. Or salary, yeah.

Nathan Lenahan (39:24.731)
Man, I'd love to see them compete against each other, right? Like, you've got a great GM over here, great GM over here. They both got great brands. We actually have slightly different. Both of them are in the Northwest quadrant of DFW. it's like North and then West is kind of Bart's.

That's the two locations we bought. then Flower Mound, where Christmas is, is right in the middle. And so we have a chance to do some really interesting things there. So I won't even eliminate the idea that it could be, you keep both brands. Yeah. Which is what I bet.

Kajabi Course Video DRG (39:58.34)
keep it separate. That'd be interesting. Yeah. It wouldn't matter to anybody at the end if you tried to sell it. They're only gonna buy the cash flow. Yeah.

Nathan Lenahan (40:10.544)
100%. And I mean, that's what private equity does anyways, right? Like they have, you know.

Kajabi Course Video DRG (40:13.486)
Yeah, they don't like I don't care if it's bards or Christmas, right? It's it's the cash loan.

Nathan Lenahan (40:17.053)
Yeah, as long as it can self like service the debt and perform at the level they needed to, they have 10 brands across DFW. Most people don't know that. I prefer to have one brand. I'll be honest. I prefer to have one brand because you're only investing one brand, all your energy is going into one brand. But there's certainly a case I could say like you keep up.

Kajabi Course Video DRG (40:26.415)
Yeah.

Kajabi Course Video DRG (40:37.07)
Yeah. Yeah, that'll be interesting decision. Did you guys use the same capital partners throughout or did you have to, Hey, this one works better or we don't go party, party, party, pursue or.

Nathan Lenahan (40:49.373)
We use different lenders every time.

Kajabi Course Video DRG (40:54.5)
Why?

Nathan Lenahan (40:55.969)
We use SBA brokers. So like the loan brokers, they, that's where they steered us. So we, as long as we're getting term sheets that make sense and can get the deal done, then we're pretty happy. But like the first time we went with Live Oak, you know, and they're just super conservative and, and we are, they do, they do. So that was good, but we had some, we had some license issues with the second acquisition of how

Kajabi Course Video DRG (40:58.095)
Yeah.

Kajabi Course Video DRG (41:09.305)
Yeah.

Kajabi Course Video DRG (41:14.628)
Well, they love HVAC though, yeah.

Nathan Lenahan (41:23.697)
They wanted to think through that. so we're like, okay, let's just go talk to a bunch of other people. and so the second one was with fund X, which is, a non -billion. Yeah, they were, and they've, they've actually just shut down their whole, they're not doing SBA anymore. yeah. So that's, that's kind of interesting. They did just sell our loan. Well, technically refinance it. like.

Kajabi Course Video DRG (41:32.026)
Kind of an online guy. Yeah, they're an online, yeah.

Kajabi Course Video DRG (41:39.25)
interesting. Yeah. I wonder if they sold your loan to somebody else. Yeah.

Nathan Lenahan (41:47.185)
I guess we got caught up in the sale, but there's not really a loan left, so who knows. And then the last one was Byline Bank. OK. Yeah. Yeah, they did a.

Kajabi Course Video DRG (41:50.808)
Yeah, yeah.

Kajabi Course Video DRG (41:55.034)
Byline, I've used byline, yes. Out of Missouri, yeah. Yeah, now you're in the 2021 is probably 6%, but then 2023 comes around, you're in the 11 .5, 12 % kind of range.

Nathan Lenahan (42:09.501)
Yeah, we never hit 12, but yeah, we've been 11 and a half, think, 11 and a quarter. yeah, hoping there's only upside for us.

Kajabi Course Video DRG (42:13.359)
Yeah.

Kajabi Course Video DRG (42:18.137)
I it's like downside. Well, I've seen some lower loans. I've seen an 8 .5 % loan on some SBA 7A's. So hopefully that cost capitals going down for you guys. Yeah.

Nathan Lenahan (42:27.109)
Yeah, I would kill for that. mean, we're really excited about the, you know, the you can refinance actually, you can. We well, yeah, we just refinance out. So like, we don't have three loans, we brought it all into one loan. And that's part of what made it more complex, because whether we want it to or not, like the bank, the new bank wants it all under one loan. And so yeah.

Kajabi Course Video DRG (42:33.274)
Can you refinance that stuff? Yeah. Yeah.

Kajabi Course Video DRG (42:50.819)
Yes, they do. Yeah. Why go somewhere else? Just pay us. Yeah.

Nathan Lenahan (42:55.525)
Yeah, exactly. and I mean, for us, like it made things a lot simpler. Yeah. Credit and freaking entities and legal BS has been like the bane of my existence since we, start, cannot believe how much time and effort we've had to spend on that stuff. just, yeah, it's kind of crazy, but, I shared a post recently. I'm like, man, I think I just got my credit pulled for the 87th time after. man. I'm so sick.

Kajabi Course Video DRG (43:19.406)
yeah, I saw that post, right? Your credit or the business's credit? Your personal credit? Your credit, 87 times. that would, that's must.

Nathan Lenahan (43:24.221)
No, my credit, yeah, because I got to, I I'm joking, I'm joking obviously on 87 times, but it's probably like 12 to 15 times at least. Yeah, well, every supplier, every van, every bank, every freaking insurance, like they all want to pull your credit, every one of them. Like what, at what point does it matter that I have a business? And so was talking to Chase recently, Chase Bank, and they said 50 million, 50 million is when they start.

Kajabi Course Video DRG (43:33.742)
Ping ping ping ping.

Nathan Lenahan (43:52.093)
allowing you to do a corporate guarantee and you're on the PGA or then. Okay, well, yeah, so I went out to the guys and like, all right, goals 50 million next year because I'm tired of this crap.

Kajabi Course Video DRG (43:55.445)
wow, okay, you got a ways to go. Yeah.

Kajabi Course Video DRG (44:02.234)
Yeah. What's your philosophy on the equipment and the trucks they drive? I mean, a lot of guys that I see on X or LinkedIn, go, man, if their trucks are old, we immediately upgrade everybody.

Nathan Lenahan (44:19.077)
I think that's our aspiration. We pretty much have new vehicles for everybody. Some of the new acquisition, definitely older. we will start cycling through that fleet. And I think we're going to cycle over to probably some kind fleet manager leasing type deal. We've been kind of buying one offs and we did leasing for one and fleet management is a pain in the ass.

Kajabi Course Video DRG (44:44.378)
Yeah, it's another kind of job skill.

Nathan Lenahan (44:47.675)
Yeah, it is. Yeah, it's a pain. So just trying to keep that straight, keep up with the maintenance for it, you make sure you're not losing bands because of repairs. It's hard. yeah, we'll probably move to more of a fleet management, you know, enterprise or, you know, like these other types.

Kajabi Course Video DRG (45:03.866)
Yeah, Chase will happen to do that when you're at 50 million too.

Nathan Lenahan (45:06.877)
Yeah, yeah, maybe we can stop PGing stuff then. But that's the first time I've gotten a banker to actually tell me, like, give me a threshold, tell me a number because I like, that will drive me not that I need like a whole lot more driver urgency, but that will help me explain why we need to do 50 million like as fast as possible.

Kajabi Course Video DRG (45:26.106)
Yeah. So are you still open looking for acquisitions or are to get to a, you know, are you going for the 50 million goal? Yeah.

Nathan Lenahan (45:36.123)
Yeah. So, absolutely open to more acquisitions, you know, and, and I think still kind of focusing on DFW, we still only do the, like the Northwest quadrant. So DFW is massive. so opportunities there, opportunities to do other cities. So like, if we did something outside of DFW, I think we'd consider like partners or like capital partners to go out and do that because we feel like we have the model kind of, I won't say figured out, like,

We got a foundation built. We know how to grow. We know how to build a great culture. And I think it'd be nice to not always use all our cash to do it. So we'd be open to that as well. then, yeah, I think 50 million is absolutely a goal. It is a milestone among other milestones, but I think 100 million plus will be absolutely the horizon we're looking for. It's a matter of time. So the first time I did it, man, I think it was like,

50 million in five years or something like that. you know, reality has, has tempered that, that, that goal a little bit, but, but I mean, we're starting to a path. we, just added plumbing. So we just launched plumbing recently. You know, now we have a $10 million HVAC customer base to build plumbing off of. Like that should be pretty meaningful. And I don't see why we couldn't get to 15, 20 million in the next, you know,

Kajabi Course Video DRG (46:38.148)
Yeah, yeah, yeah.

Nothing like getting that first punch in the face. Yeah.

Kajabi Course Video DRG (46:58.362)
Yeah. Would you see the rationale to keep the plumbing brand separately? I mean, that makes sense. Like you have a plumbing business. it going to be bards Christmas? And then you have an individual plumbing, you buy a, you know, $3 million plumbing business and they keep the brand.

Nathan Lenahan (47:18.437)
I mean, that could work. I mean, it launched with Barts before we acquired Christmas. So it's Barts plumbing. Yeah. So we didn't go separate. We have considered even like making Barts the commercial arm and brand and pushing that over and focusing on the commercial side where my partner Scott kind of comes from. We both have like facility management backgrounds. So

Kajabi Course Video DRG (47:23.789)
Okay, yeah, gotcha.

Nathan Lenahan (47:43.421)
so lots of opportunity there. And then Christmas focuses on residential. Like that's another pathway that, that could kind of come in front of us, but plumbing is out of P be a piece of it. Electrical will be, is on a roadmap over the next 12 months. And then. Cause the only way to expand, like you either have acquisition, geography or services. That's pretty much it.

Kajabi Course Video DRG (48:00.782)
Yeah. Now those services kind of have some different economics to it, like electrical and plumbing. They, you know, they're some at one time. Is there any reoccurring revenue in those businesses?

Nathan Lenahan (48:11.185)
far less reoccurring or recurring revenue there, but lots of cross -selling opportunities for sure. And margins are higher. So HVAC is the lowest of the three and pretty meaningfully lower, if I'm honest. So, and way less seasonal. So like right now, you know, when you're in February trying to get like a phone call a day or whatever, because nobody cares about HVAC in February in Texas.

Kajabi Course Video DRG (48:40.622)
Yeah, it's not cranking. Just leave the doors open. Yeah.

Nathan Lenahan (48:42.867)
Yeah, or like, there's usually like one kind of blitz of cold, and that's where everything goes wrong, everything gets fixed. And then you kind of just go through February until you get to March and start getting some, you some warmth going and everything else. But we're trying to kind of level out that, that cash need and revenue across the season.

Kajabi Course Video DRG (49:02.242)
Right. Is that there's always a feeling there's a mandate we need to fix the blumps in the cashflow, but sometimes businesses are run well with just the lumps. Right. Yeah.

Nathan Lenahan (49:14.109)
Sure. Yeah, think this is where debt creates more urgency.

Kajabi Course Video DRG (49:20.324)
Yes, that changes things. I still owe the same amount of money every month. Yeah.

Nathan Lenahan (49:24.605)
Well, when you're when you're when you have no debt or very little debt on a a we can write like you can operate at breakeven Hey, this February was really tough guys. We've only been breakeven the last three months. And then you're just breakeven. It's different when you're Hey, we just broke even operationally and then you paid you know, another 60 90 100 K that month each month for a debt payment.

Kajabi Course Video DRG (49:29.656)
We could take the lumps.

Kajabi Course Video DRG (49:48.174)
Yeah. What does plumbing look like? Do they have, is it lumpy or is it consistent?

Nathan Lenahan (49:53.829)
It's pretty consistent. They have a few like, you know, normal times when people, you know, things slow down, but it's like a week at a time. It's a, you know, school started, school got out, you know, holiday week, Thanksgiving, actually Thanksgiving is really busy actually. Yeah. Yeah. Right. So, so it will certainly help a lot once we get there. And then you can use, you know, some of that activity to help keep the HVAC guys, you know, busier during the slow season too.

Kajabi Course Video DRG (50:06.732)
Actually Thanksgiving is busy. I wonder why that is.

Kajabi Course Video DRG (50:21.614)
Yeah, yeah.

Nathan Lenahan (50:21.969)
So we do training and more helpers and like, know, so just lots of opportunity to kind of improve, but yeah, I mean, we came really close to buying an electrical business, like a sizeable one. we backed off because we weren't trying to expand there yet.

Kajabi Course Video DRG (50:34.008)
Yeah. Now, it sounds like, you know, you've had a high hit rate, but is there how many of these HVAC companies have you looked at over the last two to three years and say, no.

Nathan Lenahan (50:48.489)
mean, probably a hundred plus, I would think. Yeah. I mean of, of things that we submit LOIs on at this point, shoot, we gotta be like a 90 % plus like LOI submitted, accepted and closed at this point.

Kajabi Course Video DRG (50:51.642)
100 plus? Yeah.

Kajabi Course Video DRG (51:08.666)
Yeah. Well, you get a marksman badge if you had 99. Yes. Yeah.

Nathan Lenahan (51:11.677)
Yeah, I mean we're pretty high and I'm just making that number up but like we don't if we get to LOI like we typically close so So we that's one of our I mean we have a very tight kind of pitch You know, like we're gonna give you a price that's fair and that we with terms that we know we can close We're gonna take care of your people. We're gonna take care of your customers We're gonna honor your legacy if that's something you care about

Kajabi Course Video DRG (51:19.054)
Yeah. Interesting.

Kajabi Course Video DRG (51:35.502)
Yeah. That's a great pitch. Yeah. So tell me a little bit about this, this recruiting business. and the reason I bring this up, I I've seen some other models where, you know, finding good technicians, whatever industry, it could be a medical industry, it could be a HVA industry is they always have the technicians. So why not start a training center for technicians or a recruiting center for technicians? You decided or.

Nathan Lenahan (51:39.015)
Thank you.

Kajabi Course Video DRG (52:04.954)
creative recruiting business out of that. Tell me a little about.

Nathan Lenahan (52:09.447)
Well, it actually didn't even start with technicians. started with, we hired a GM for our HVAC company. Twitter went really, was really interested in that fact. And lots of people reached out asking, how did you do that? Where'd you find them? Like how big are you? How does this make sense? Where are you paying them? and so honestly, if you remember, like I was talking about how do I pay my bills and am I going have to go get a job? And so this was like my last ditch effort to not have to go get a job somewhere else. And.

Kajabi Course Video DRG (52:37.796)
Hahaha

Nathan Lenahan (52:38.557)
And so I just threw out on Twitter who wants to be an operator and who wants to hire operators. I ended up with 53 sales meetings from that and figured, Hey, like this is something. I don't know if it's what I really want to do, but it's something. And from WeWork, yeah, like great response. And then I had hired over 1200 people over the last, you know, six or seven years of my career. like deeply embedded in like hiring. And then I just naturally connect people anyways.

Kajabi Course Video DRG (52:52.216)
with that kind of response, yeah.

Nathan Lenahan (53:06.909)
I help people find a lot of jobs. So I was like, yeah, well maybe I could build a recruiting company out of this. I really wanted to do training. Actually, I wanted to do like operator bootcamp is where I started. And then, and everyone wanted recruiting, recruiting, recruiting. And then I didn't post anything about it for like 60 days. Just talk to, you know, those 53 people didn't say anything. And people just kept bugging me about it over and over and over. It just wouldn't die. And so I'm like, okay, let's do this. And honestly, the first, the very first customer I got, man, I found him someone in like a week.

Kajabi Course Video DRG (53:16.463)
Yeah.

Nathan Lenahan (53:36.733)
was like a 20 grand fee and I was like, it can't be this easy.

Kajabi Course Video DRG (53:40.558)
Yeah, but you're working for competitors now.

Nathan Lenahan (53:44.551)
doesn't mean it's just HVAC. I'm not like, but it's not technicians. I didn't start with technicians. I started with operators. So GMs, know, like anything that kind of funnels into GMs, so sales ops. And so like this person's in Kansas city and they have a, you know, they have a playground installation company and they need a leader. And so I find a leader.

Kajabi Course Video DRG (53:50.24)
-huh.

Kajabi Course Video DRG (54:06.03)
Yeah. And how did you find the project to go find the... they DM'd you. then they told you, I need somebody like this. And then you went and found them. Okay. Yeah.

Nathan Lenahan (54:09.937)
They DM'd me from Twitter.

Nathan Lenahan (54:17.245)
Yep, exactly. So went and found them. And then it just kind of expanded from there. So everything has been from Twitter or LinkedIn, probably 95 % from Twitter. I think we're at like, I don't know, 20 plus placements this year. so started in October, November last year. so operators, roofing companies, foundation repair companies, lots of commercial HVAC companies.

I got in with a kind of independent sponsor portfolio, all their portfolio companies on the HVAC plumbing side. So doing a lot with them, VC backed startups. So I got a couple, know, one Y Combinator one. Yeah, raised a ton of money. They're doing good stuff. Yeah, a couple other ones in roofing. So like kind of all over the place, but anything having to do with, let's say like tangible.

type industries, manufacturing, construction, home services, et cetera, is where we thrive. And so that's gone really well. And then 60 days ago, we launched doing skilled trades, finding technicians. And so I brought a recruiter on. He helps me with that. Actually, he helps me with all the recruiting, but he really focuses hard on the technician. And I think of the 20 we've done this year, we've placed like seven or eight technicians in the last 60 days.

Kajabi Course Video DRG (55:22.735)
Yeah.

Kajabi Course Video DRG (55:36.154)
So this is nice cashflow that makes up for what you're not getting paid with the HVAC business as you're buying, yeah.

Nathan Lenahan (55:41.115)
Yes, yeah, it's gone really well because the margins are insane.

Kajabi Course Video DRG (55:45.146)
Yeah, they're 100 % margins, aren't they? I mean, it's just a phone and a internet connection.

Nathan Lenahan (55:50.333)
Yeah, I mean, it's not that easy, but like without a recruiter, yeah, I was sitting at probably 96 % margins and then with a recruiter, it's probably more like 45.

Kajabi Course Video DRG (55:56.473)
Yeah, yeah.

Kajabi Course Video DRG (56:00.474)
Yeah, I had a friend used to do recruiting in the tech industry and so on. So yeah, it was just a phone and I'm making 200 ,000. And this was like 15 years ago. Yeah.

Nathan Lenahan (56:08.797)
Yeah. Yep. So, I mean, we'll probably do, if we just stay on pace of what we've done so far this year, we'll do like 450, 500. Yeah. So that has certainly improved relationships with my wife on the financial side. And yeah. So the hard part is like, you know, I've committed some sins before on, you know, investments, not paying off. like, I got to make some of those things, right. Get things caught up on other things, but

Kajabi Course Video DRG (56:17.486)
Yeah, that's fantastic.

Kajabi Course Video DRG (56:24.932)
Cushion, yeah.

Nathan Lenahan (56:38.875)
Yeah, like if that continues as a great business, we'll be good there. And then I think, you know, going into next year, like lots of optimism for.

Kajabi Course Video DRG (56:45.306)
Does, and do you own this or does anybody else in the business own this? That's yours. Okay. And you were, you could only get to this by doing all the other stuff, like seeing the need. Yeah. Yeah.

Nathan Lenahan (56:49.213)
This is 100 % mine.

Nathan Lenahan (56:57.757)
Exactly. Yeah. So that's the big one there. And then I do continue to think about building like a community for operators and kind of really going deeper there because the amount of people I talk to every week on this stuff is kind of crazy. The number, like I've had three different CEOs from VC backed startups, like well -funded ones reach out asking about like...

building communities for operators, training operators, like how do they get plugged into the very little funnel I'm already in? Yeah, kind of like the Hamptons. Kind of like the Hamptons. think a little different, because so many of them want to focus on just CEOs and owners.

Kajabi Course Video DRG (57:29.048)
Kind like the Hamptons.

Kajabi Course Video DRG (57:40.494)
Yeah, yeah.

Nathan Lenahan (57:40.931)
And so like, think of operators as like a different breed. Like there's owner operators for sure. And I think that's gonna be a very powerful thing. I think of more as like, it's almost a sister company to the smooth operators search, like the recruiting company. So you bring people in, you help train them, you like get assessments for them. You put all the resources out there for them. And then you have like different tiers for sure, but like getting them ready for like the best operator jobs.

and trying to get them out there. And then owner operators, hopefully they're able to find like incredible talent in there as well. So that's kind of the thoughts. I've seen a couple of really cool, I've been a part of a few communities that really cool. Hamptons is probably a little more like too bougie, if I'm honest, for what I like the audience I've been.

Kajabi Course Video DRG (58:15.257)
Yeah.

Kajabi Course Video DRG (58:29.572)
Yeah, yeah, yeah. No, it's a lot of high tech players.

Nathan Lenahan (58:35.27)
Yeah, exactly.

Kajabi Course Video DRG (58:37.85)
Cool, Nathan, that was a fascinating conversation. I really appreciate it.

Nathan Lenahan (58:41.745)
Yeah, my pleasure, man. been fun.

Kajabi Course Video DRG (58:44.314)
Yeah, that is great. And I'm gonna stop.