Landon Mance·October 23, 2023

Partnering with an Operator to Buy a Business | Landon Mance Interview

Landon Mance, a Las Vegas-based financial adviser and co-owner of an RIA serving private business owners, bought Nevada Tree Service for $1.65m in 2023 as a pure investment rather than a business he'd run himself. After an informal two-and-a-half-year search (including a pass on owner-dependent accounting practices), he recruited his pickleball friend and neighbor Luke - a burned-out corporate manager with no tree industry experience - to be the day-to-day operator, taking 5% equity (with a path to 20-30% over five years) while Landon injected roughly $500k of equity and sole-guaranteed a ~$1.2m SBA loan. The deal closed after a notably fast, face-to-face Zoom negotiation that landed at $1.65m, and the business quickly hit record revenue months and its largest job ever, though the new owners underestimated vehicle/equipment repair costs and saw their relationship with the sellers deteriorate after verbal promises about included equipment weren't honored. Landon settled into just 10-15 hours a week (trending toward 3-5), keeping his financial advisory practice as his main job, while Luke ran operations; the long-term plan is to aggressively grow Nevada Tree Service over 5-8 years, build out a management layer beneath Luke, and eventually sell to a financial buyer or larger searcher rather than distribute profits now.

Deal facts

purchase price: $1.65m
sde ebitda: SDE ~$600k as marketed (seller-run, thinly operated); Landon estimated realistic adjusted SDE closer to ~$300k after normalizing owner labor, rent, and admin costs
revenue: just over $1m (marketed); business hit $200k+ in single months post-acquisition
financing structure: SBA loan ~$1.2m (about 66% of total project cost) + ~$500k equity injection from Landon ($400k toward acquisition/fees plus $100k working capital) + $50k equity from operator-partner Luke; Landon sole guarantor on SBA loan
notes: Total project cost $1.8m ($1.65m purchase price + $50k bank/closing fees + $100k working capital). Landon holds 95% equity, Luke (operator/GM) holds 5% at close, with a 5-year goal for Luke to earn/buy up to 20-30% equity via performance metrics and buy-in. SBA rate was 10-11%, debt service ~$16,500/month. Live Oak Bank rejected the deal (Landon believes due to lack of industry experience / tree-work safety risk); financed with a different lender instead.

Why this business

Landon is a financial adviser (co-owner of Backbone Planning Partners) who had built a sizable investment portfolio through years of frugal saving and wanted to diversify into buying a business as an alternative investment. He initially thought he should buy something adjacent to his expertise (he looked at accounting practices) but found those were overly owner-dependent solopreneur operations. He realized his real passion was for fundamentally sound small businesses generally, not any specific industry. Nevada Tree Service came to him through broker Trent Lee; it was attractive because of strong reported SDE (~$600k) on ~$1m+ revenue, 60+ years of operating history, and by far the best online reviews of any tree service in Las Vegas.

What's working

Partnering with Luke (a trusted friend/neighbor from pickleball and church) as operator/GM let Landon stay in his day job as a financial adviser while contributing only ~10-15 hours/week (declining toward 3-5 hours/week by month four)
Luke proved to be an excellent operator - earned strong employee respect, handled complex logistics (a job requiring a 90-ton crane, 10 dumpsters, multiple tree removals) and the company's largest-ever job ($46,500) within three months of ownership
Company posted its highest-grossing revenue month in its history within the first few months of new ownership
Clear upfront alignment: equity split (95/5), a path for Luke to earn 20-30% equity over 5 years via performance metrics plus buy-in, and an explicit written 'business divorce' agreement were all negotiated and documented before closing
Strong cash management discipline - grew bank balance from $100k to $200k despite heavy near-term repair costs
Landon's experience advising small business owners (his RIA firm works exclusively with private business owners on growth/succession/comp planning) gave him confidence to run the deal and delegate effectively despite zero tree-industry experience

What's hard

Failed to do adequate diligence on the age/condition of vehicles and equipment - budgeted ~$20-30k for the whole year in repairs but blew through that in the first 90 days
Relationship with the sellers soured after closing - sellers verbally promised certain tools/equipment would be included in the sale and then reneged, and other verbal assurances were not honored because they weren't captured in writing
Live Oak Bank rejected the SBA financing after initial pre-qualification, apparently due to Landon's lack of tree-industry experience and the inherent safety risk of the business (crews working in tall trees with chainsaws); had to find a different lender
The seller couple had run the business extremely leanly (no rent, no debt, wife working full-time unpaid, husband doing his own equipment repairs), so the marketed SDE overstated what SDE would look like under normal-cost ownership - required renegotiation logic (add-backs in reverse) during price talks
Luke's transition was intense - drinking-from-a-firehose learning curve, 60-70 hour weeks during equipment breakdowns and the company's biggest job
Operator's ownership stake (5% at close) required Landon to be comfortable giving up significant future equity/upside since Luke was unwilling to personally guarantee the SBA loan

Notable quotes

I knew that I knew that I couldn't run the business um I knew that I didn't want to run the business so that it just wasn't it just wasn't really an option

I don't look at Luke as my operate you know my operator Luke is my partner who happens to operate the business

I think that people get really hung up on ensuring that you know they're getting like the best deal on this on this small business... 50,000 100,000 even 200,000 in the small business World space it's not going to have that big of an impact on what you're trying to do

the short answer is just it's the ladder uh we just we failed we failed at doing proper due diligence on the vehicles and the equipment we should have been okay much more extensive in what we did there