Scott Walton·May 13, 2024

Building a $10m Platform from 2 Low-SDE Businesses | Scott Walton Interview

Scott Walton, a Canadian tech entrepreneur with an eight-figure exit from a digital twin company, partnered 50/50 with a co-founder to buy two small blue-collar trades businesses in St. John, New Brunswick in early 2022: Easy Gas (heating services, $1m revenue, $150k SDE, purchased for $450k) and George Freeze Plumbing ($2m+ revenue, ~$250k realistic SDE, purchased for $1.3m). Both were 30-year-old, owner-operated companies sourced off-market through wealth manager relationships rather than brokers. Financing was creative and SBA-free: Easy Gas used 45% bank / 45% seller financing / 10% equity, while the plumbing company was 100% bank financed with a 15% holdback escrow. The first 18 months were dominated by people and culture work — restructuring compensation, implementing EOS, and explaining the 'why' behind customer experience steps to technicians — which eventually caused employees to organically refer new hires without any financial incentive. Scott also ran Google recruiting ads targeted at tradespeople in expensive Canadian cities looking to relocate, which sourced half of their applicants. Combined revenue doubled from ~$2.5m to ~$5m with EBITDA reaching ~$800k by fall 2023; they rebranded as Matrix Mechanical and hired a president, with a stated goal of reaching $10m revenue by end of 2024 and eventually building a $100m multi-trade, multi-city platform.

Deal facts

purchase price: $450k (Easy Gas) + $1.3m (George Freeze Plumbing) = ~$1.75m combined
multiple: 3x SDE (Easy Gas); ~3.7x SDE on paper / ~5.2x realistic SDE (Plumbing)
sde ebitda: SDE $150k (Easy Gas); SDE $350k on paper / ~$250k realistic (Plumbing)
revenue: ~$1m (Easy Gas); just over $2m (Plumbing); ~$2.5m combined at acquisition
financing structure: Easy Gas: 45% bank + 45% seller financing (vendor takeback) + 10% equity ($45k); Plumbing: 100% bank financing, 8-year amortization, 15% holdback in escrow for 2 years; $200k working capital adjustment at close (partners each contributed $100k)
notes: Both deals closed ~winter 2022. No SBA (Canadian deals). Scott and his 50/50 partner Neo sourced both off-market via wealth manager relationships. Revenue doubled to ~$5m and EBITDA reached ~$800k by fall 2023 (~18 months post-acquisition). Rebranded combined businesses as Matrix Mechanical. Hired a president ~6 months before interview. Targeting $10m revenue by end of 2024.

Why this business

After a tech career and an eight-figure exit from a digital twin company, Scott and his partner Neo recognized that trades businesses are recession- and virus-proof, that there is a silver wave of retiring Baby Boomer owners with few successors, and that the trades would be 'around for a very long time.' They wanted a One-Stop shop for mechanical services and viewed the trades as a safe, durable starting point to get their feet wet before growing through further acquisitions.

What's working

Culture and people transformation: spent the first 9 months restructuring compensation, benefits, values, and implementing EOS — employees began organically referring job candidates after ~9 months without any financial incentive
Recruiting via Google ads targeted at tradespeople in high cost-of-living Canadian cities (Vancouver, Calgary, Ottawa, Montreal) looking to relocate to St. John, which brought in high-quality applicants from across the country
Pricing modernization: updated hourly rates and markups which had been dated, contributing to revenue growth
Digital marketing: launched new brand (Matrix Mechanical), applied Google LSA, GMB, PPC, and ServiceTitan for lead attribution and customer experience
Exclusive utility relationship: Easy Gas is the only certified gas technician service provider for the local utility, meaning all service calls go to them first
Fractional CFO with trades domain expertise improved financial controls, job costing, work-in-progress calculations, and gave banks confidence
Hiring a president with plumbing/medical gas background who has significantly grown the commercial project estimate funnel
Creative deal structuring: reading seller motivations, offering options not ultimatums, and using seller financing to get better terms

What's hard

Key person risk at small scale: one technician threatened to quit three weeks after close while both partners were traveling, causing significant anxiety at a time when they had no industry knowledge
Day-one salary demands: half the team asked for raises the day after close, claiming they had been promised raises
Working capital surprise on Plumbing acquisition: wrote a fixed working capital number into the LOI instead of a normalized level, resulting in a $200k cash call at close when receivables spiked
Cash flow strain from large commercial projects: 10-15% holdbacks on big projects (e.g., $150k-$200k withheld on a $1.5m project) created significant cash flow gaps not initially factored into projections
AR challenges in commercial work: small commercial clients (e.g., franchise operators) often cannot pay by credit card upfront the way residential customers can, leading to slower collections
Variable comp resistance: tradespeople were skeptical of bonus/incentive programs, viewing them as snake oil rather than a benefit
Both businesses were very small (SDE $150k and ~$250k), making them highly susceptible to losing even one or two people and creating existential risk; Scott now advises against buying this small unless you can tolerate the risk
Heavier hands-on involvement than anticipated in the early months; underestimated how long it would take to shift from working in to working on the business

Notable quotes

We figured if we're going to start anywhere we might as well pick a recession virus proof type business to go with and something that's going to be around for a very long time and get our feet wet there and then see where it takes us.

We told the team we're like look like we're going to make every single person extremely uncomfortable for a while like it's probably going to take you a year maybe a year and a half to for everything that we're doing to kind of for you to believe what we're saying and so we said to the team in every All Hands every Tuesday morning don't like you don't have to believe what we're telling you right now just watch what we do.

We set the geography for our Google ads to focus on those bigger cities — we basically set the geography for our Google ads to focus on those bigger cities.

I'll usually ask very early as soon as I feel like I have trust with them I'll say what do you want to do with this money and it usually catches them off guard but I'm like no like okay we close the deal I'm cutting you a check for 450 Grand like what are you doing tomorrow.