Tim Lahey·January 2, 2025

The Path to Becoming a Better Operator & Strategist | Tim Lahey Interview

Tim Lahey is a former finance professional and Kellogg MBA who left a high-trajectory career at the Federal Home Loan Bank — where a seven-figure leadership role was within reach — to acquire Home Run Technology, a residential AV and home technology company in the Chicago suburbs, closing in February 2021. He paid roughly 2.3x SDE on a business doing $1.6m revenue and ~$230k SDE, using an SBA loan with a 10% seller note. Year one was brutal: a demand surge combined with no job costing tools and poorly understood work-in-progress cash flows drained a $150k credit line and required significant personal capital injection, all while Tim's father was dying of dementia during the pandemic. Despite those fetal-position moments, Tim treated buying small as a forced master's degree in the industry — rolling up sleeves alongside technicians, learning network topography, and building referral relationships with builders and specifiers. Four years in, the business has doubled in revenue to roughly $3.2m with ~15% net margin, Tim has built a leadership team using EOS, and he is targeting $10m in revenue by 2027. He reflects that buying small is not easier — it just trades financial risk for operational intensity — and that the experience forged the strategic operator he needed to become.

Deal facts

purchase price: ~$530k (2.3x SDE on ~$230k SDE)
multiple: 2.3x SDE
sde ebitda: SDE ~$230k (year-end 2020)
revenue: $1.6m (year-end 2020)
financing structure: SBA loan + 10% seller note + working capital line ($150k)
notes: Closed February 2021. Business had been operating ~15 years with two owners. Working capital line was exhausted in year one due to rapid growth and work-in-progress cash flow issues.

Why this business

Tim was industry-agnostic throughout most of his search but gravitated toward residential technology (AV/home tech) because of a personal affinity for technology from childhood, familiarity with the AV industry, and a timely thesis that pandemic-driven remote work and stay-at-home life would dramatically increase demand for home technology solutions. He also saw a fragmented, lifestyle-business-dominated industry ripe for professionalization, with a long-term belief that home tech would become the fourth major home service trade alongside HVAC, plumbing, and electrical.

What's working

Rebranding and truck wraps drove inbound leads and employee recruitment — two new hires came from seeing vans on the highway
Implementing job costing software caused margins to pop significantly by making actual project margin visible for the first time
Building referral relationships with builders and specifiers by listening to their needs rather than prescribing solutions
Adopting EOS (Entrepreneurial Operating System) to formalize operations and build a leadership team, freeing Tim from absorbing every day-to-day ripple
Doubling revenue from $1.6m to approximately $3.2m over four years with ~15% bottom line
Becoming one of the largest Sonos dealers in Chicago as part of a broader professional-install positioning
Deliberate, culture-vetted hiring after the painful early lesson of losing team members by pushing change too fast

What's hard

Severe working capital crunch in year one: demand surged immediately post-close, work-in-progress was poorly understood, the $150k credit line was exhausted, and Tim injected roughly another $150k of personal capital
Project-based revenue with no job costing mechanism meant writing jobs at sub-floor margins while growing — cash looked healthy but the business was running on empty
Culture shock moving from a 400-person institution to a 10-person company where one bad day by one employee could shift morale company-wide
Pace of change overwhelmed early team members; lost valuable people in year one by pushing too many initiatives too fast
Industry has no certification or barriers to entry, making talent the key and only defensible asset — hard to recruit and retain
Personal hardship: father was battling dementia and passed away in the first year of ownership, coinciding with the business's most difficult period
Original thesis of acquiring two or three small companies and rolling them up in year one proved naive; mentors correctly told Tim he was over his skis
Buying small means the business is more of a lemon than it appears — more work required than anticipated, and the owner has to do that work personally

Notable quotes

Buying small doesn't mean it's easier at all and I think if you're looking to do this the questions you should ask yourself is am I ready for the journey am I ready for the fetal position moments and that should be agnostic of size.

The plane is increasing in altitude you're rebuilding it and the wings are coming off while you're doing it.

If I had bought a large AV company I would literally sit in my office and I would apply the Frameworks and things I had learned from business school or my corporate life and I would be definitely a high altitude playing strategic moves but I don't think I would have learned and understood what makes this industry tick.

We were growing but we were writing jobs at a margin that was sub what we needed and so it's almost like this engine this car is just driving so fast that the fuel is showing that it's full but it's really empty.