George Vallone·March 23, 2022

How to Buy a Business Using Tactics from B2B Tech Sales

George Vallone, a 10-year B2B tech sales veteran, used his sales infrastructure skills — cold outreach, drip email campaigns, A/B testing, and funnel management — to build a proprietary list of 400 commercial cleaning companies across southern US cities and ultimately acquire Nuveldi's Cleaning Services in Nashville, Tennessee in January 2021 for $590k ($350k SBA + $240k seller financing). He spotted the deal through a broker despite his primarily off-market search and bought at roughly a 2x EBITDA multiple, taking advantage of pandemic-depressed 2020 revenues and motivated sellers (a husband-and-wife team wanting to retire). Upon taking over, George immediately fired residential and Airbnb clients and rebranded the business as an apartment turnover specialist — the only provider in Nashville offering cleaning, painting, carpet cleaning, and punch-list services under one contract — dramatically reducing vendor management burden for property managers. In year one he grew revenue from $927k (pre-pandemic peak) to $1.1m with $286k adjusted EBITDA, scaling from 16 to 49 client properties entirely through word-of-mouth referrals in Nashville's tight-knit property management community. His key near-term plan is to double revenue to roughly $2.1m by adding two new properties per month, and he is eyeing a roll-up acquisition in a nearby market such as Huntsville, Alabama.

Deal facts

purchase price: $590k
multiple: ~2x EBITDA
sde ebitda: EBITDA $327k (2019)
revenue: $927k (2019); $600k (2020)
financing structure: SBA loan $350k + seller financing $240k over 7 years with first year deferred
notes: Business is Nuveldi's Cleaning Services in Nashville, TN. Founded 2008, bought January 2021. Year-1 post-acquisition: $1.1m revenue, $286k adjusted EBITDA. 2022 goal: ~$2.1m revenue, ~$487k EBITDA.

Why this business

George was drawn to B2B recurring revenue models that were simple and not tech-dependent. A friend investing in Airbnb rental properties sparked the idea that cleaning services fit that model. He focused on commercial cleaning in high-growth southern cities with no income tax, expecting a post-pandemic surge in apartment turnover demand. Nashville's population growth and $10B/year in new construction made it an attractive market.

What's working

Rebranded from a generic cleaning company to an apartment turnover specialist offering cleaning, painting, carpet cleaning, and punch-list services under one roof — eliminating the need for property managers to coordinate multiple vendors
Niche focus on vacant apartment units provides standardized, repeatable work with fewer callbacks versus residential or Airbnb clients
Word-of-mouth referrals within Nashville's tight-knit property management community have been the primary source of new customers
Quality assurance manager and assistant inspect every job, catch issues, and retrain contractors — protecting customer retention and enabling a word-of-mouth growth flywheel
Per-job contractor pay structure incentivizes speed and productivity
Joining the Greater National Apartment Association and attending meetings directly in front of property managers generates consistent new client leads
Switched customers from mail-based payment (30-60 day lag) to ACH (2-week lag), improving cash flow
Grew from 16 to 49 client properties in year one; revenue grew from $927k (pre-pandemic peak) to $1.1m in first year of ownership

What's hard

Severe cash flow crunch in the first months: did not anticipate a 4-6 week insurance credentialing and compliance process before any of the 16 inherited properties would pay; modeled projections on accrual rather than cash basis
Residential and Airbnb clients generated disproportionate callbacks and complaints, eroding margins and worker morale — required firing those customer segments
Gross margins are under pressure from the full-time quality assurance function, which is expensive but considered essential insurance for customer retention
Nashville food is not up to New York standards (acknowledged as a lifestyle trade-off)

Notable quotes

I'm an investor looking to purchase small businesses. Have you considered the valuation of your business and are you open to a conversation around that valuation?

I politely fired any non-apartment complex customers and said let's just focus on our niche here. This is our niche. It's apartment complexes and let's be the best in the business at doing these turnovers.

I was betting that the pandemic was going to positively affect their business. My theory at the time, which was validated afterwards after I took over the business, was the pandemic had caused a lot of people to stay in place. Nobody's really moving if they can to a new apartment or a new house during the pandemic and I said well if there's this huge backlog of people that need to move then once the pandemic is over there's going to be a huge surge in people moving and when people move into new apartments that's good for my business.

Really understand how the cash is going to flow into your business. Don't do your projections on an accrual basis, do them on a cash flow basis, because you really need to understand when that cash is actually going to hit your bank account.